Chapter 1
MARKETING: CREATING CUSTOMER VALUE AND
ENGAGEMENT
MARKETING STARTER: CHAPTER 1
Emirates’ Customer Value-Driven Marketing: Engaging Customers and Building
Brand Community
Synopsis
Founded in 1985, the Emirates Group operates across six continents and 144 cities. It is the largest international
airline in the world.
Emirates set out to be an innovative, modern, and customer-oriented provider of high-quality air travel services.
Through the years, it has successfully and continuously created a customer-focused value proposition by
offering a combination of products, services, information, and experiences customized for its market demographics
for each of its destinations. Examples are the ICE system and the Skywards Program, which have allowed Emirates
to deliver its value proposition to its customers and support its mission statement of committing to high standards.
As competitors continued to discount air fares to loss-making levels, Emirates maintained fares while managing
healthy yields supported by excellent load factors.
The company was able to do this because of its customer-value driven marketing approach and its service
proposition, for which customers continue to be willing to pay a premium.
Beyond the functional benefit of air travel, Emirates marketed its services as “The Emirates Experience,” a
genuine passion for comfort and attention to detail. Customers didn’t just fly Emirates; they experienced it.
In these digital times, Emirates is forging a new kind of customer relationship, a deeper, more personal, more
engaging one. Emirates uses online, mobile, and social media to connect with its customers and creates brand
“tribes”—large groups of highly engaged users—with the help of social media platforms such as Facebook, Twitter,
Instagram, YouTube, and Pinterest.
The company’s “Hello Tomorrow” campaign, launched in 2012 in over 80 markets, presented Emirates’ new
mindset, which celebrates global travel, conveying its commitment to connect with people and help them realize
their potential through travel.
The “Hello Tomorrow” campaign reached 43 million viewers across 85 countries. Emirates’ consideration
jumped from 38 percent to 69 percent among viewers and an impressive 84 percent of them reportedly believe
Emirates was a brand that sought to connect the world and “create a brighter future.”
Emirates has become the world’s most valuable airline brand with an estimated value of $6.6 billion, according
to the 2015 Brand Finance Global 500 report. Through its campaigns, Emirates has demonstrated commitment,
authenticity, relevance, and differentiation, and has successfully changed the way it reaches out to its customers by
moving away from the product and creating a discourse of global customer engagement.
Discussion Objective
An active 10-minute discussion of the Emirates story will help link students to key foundational marketing concepts.
Emirates 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.

Starting the Discussion
To start the discussion, ask the class who has flown Emirates before. Based on the show of hands, ask for students to
share their experience with the brand. What attracted them to Emirates? What is it about the customer experience
that is so enticing?
Next, pull up Emirates’ 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 Emirates takes and the
focus on customers. Investigate Emirates’ other social media feeds, including the company’s Web site, Twitter,
Snapchat, and YouTube. In what ways does Emirates’ obsession with customer service show through in every way?
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,
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 Emirates. Let’s take a quick look at the “About Emirates” link
at the bottom of the Emirates 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 Emirates? Go to Emirates’ other social media outlets
to reinforce the idea that everything points to Emirates’ 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 Emirates’ performance? How has Emirates been
successful? (As indicated in the Emirates 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. Thus, by creating value for customers, Emirates has captured value from customers in return.)
3. Why did the authors choose Emirates 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.
CHAPTER OUTLINE
p. 26 INTRODUCTION
When you think of air travel in the Middle East, chances are
good that you think first of Emirates. The flight experience
features an array of product offerings such as its onboard
ICE system as well as exclusive lounges for its clientele.
From the start, Emirates has grown steadily and strongly.
As competitors continued to discount air fares close to loss
levels, Emirates maintained fares while managing healthy
yields.
To its core, the company is relentlessly customer driven, for
which customers continue to be willing to pay a premium.
Emirates’ social media marketing makes the brand
experience special by focusing on building relationships and
connections.
Emirates’ successfully concentrates on delivering customer
value through its efforts to develop special and deep
experiences.
p. 27
Photo: Emirates
aircraft
➢ Opening Vignette Questions
1. Many companies claim to be obsessed with
customer service. What sets Emirates apart from
the others?
2. In your opinion, is it possible to spend heavily
on media advertising 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 Emirates build these
relationships?
4. What if a close online competitor came along,
offering comparable items and service? Do you
think most Emirates customers would remain

loyal to Emirates? Defend your answer.
PPT 1-3
PPT 1-4
p. 28
p. 29
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. 29
Key Term:
Marketing
p. 29
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. 30
PPT 1-5
The Marketing Process
Figure 1.1 shows the five-step marketing process.
1. Understand the marketplace and customer needs and
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. 30
Figure 1.1: The
Marketing Process:
Creating and
Capturing Customer
Value
➢ Assignments, Resources
Use Think-Pair-Share 1 here
p. 30
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
Learning Objective
2
p. 30
Key Terms: Needs,
Wants, Demands
p. 30
Photo: Target

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human needs.
Human needs are states of felt deprivation. They include
physical, social, and individual needs. These needs were not
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. 31
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. 31
Key Term: Market
offerings
p. 31
Photo: American
Girl
p. 31
Key Term:
Marketing myopia
p. 31
p. 32
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.

Loading page 7...

PPT 1-9
Exchanges and Relationships
Exchange is the act of obtaining a desired object from
someone by offering something in return.
Marketing consists of actions taken to build and maintain
desirable exchange relationships with target audiences.
p. 33
Key Term:
Exchange
p. 33
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. 33
Key Term: Market
p. 34
Figure 1.2: A
Modern Marketing
System
➢ Assignments, Resources
Use Discussion Question 1-2 here
Use Outside Example 1 and 2 here
p. 34
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. 34
Key Term:
Marketing
management
p. 34 Selecting Customers to Serve
A company must first decide whom it will serve.
It does this by dividing the market into segments of

Loading page 8...

customers (market segmentation) and selecting which
segments it will go after (target marketing).
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. 35
PPT 1-14
p. 35
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
p. 35
Photo: Hyatt
Regency
p. 35

Loading page 9...

p. 35
The production concept holds that consumers will favor
products that are available and highly affordable.
Management should focus on improving production and
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
Key Terms:
Production concept,
Product concept
p. 36
Key Term: Selling
concept
p. 36
Key Term:
Marketing concept

Loading page 10...

PPT 1-16
p. 37
PPT 1-17
service ideas, and test proposed product improvements.
Customer-driven marketing requires understanding
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. 36
Figure 1.3: Selling
and Marketing
Concepts
Contrasted
p. 37
Key Term: Societal
marketing concept
p. 37
Figure 1.4: Three
Considerations
Underlying the
Societal Marketing
Concept
p. 37
Photo: Door to
Door Organics
➢ Assignments, Resources
Use Think-Pair-Share 3 here
Use Additional Project 2 here
Use Marketing Ethics here
➢ Troubleshooting Tip
Societal marketing is also something that can be a

Loading page 11...

little unclear to students. Why should fast food
chains, for instance, be responsible for the nation’s
obesity (just one very topical discussion point)?
Understanding how one should balance the need for
profits with what some might consider “soft” issues
can be difficult at times. That can be even more
difficult among the politically astute students, as
they can easily lead the class into a left versus right
discussion on individual versus corporate versus
governmental responsibility. Try not to let that
happen by focusing on how companies can increase
revenues and profits by showing that they care about
customers and communities. Newman’s Own is a
potential brand to discuss because the company
donates most profits to charities and strives to ensure
a sustainable environment.
p. 38
PPT 1-18
PREPARING AN INTEGRATED MARKETING PLAN
AND PROGRAM
The company’s marketing strategy outlines which
customers the company will serve and how it will create
value for these customers.
Next, the marketer develops an integrated marketing
program that will deliver the intended value to target
customers.
The marketing program consists of the firm’s marketing
mix, the set of marketing tools the firm uses to implement
its marketing strategy.
The marketing mix tools are classified into the four Ps of
marketing: product, price, place, and promotion.
The firm blends these marketing mix tools into a
comprehensive integrated marketing program that
communicates and delivers the intended value to chosen
customers.
Review Learning Objective 3: Identify the key elements
of a customer value-driven marketing strategy and
discuss the marketing management orientations that
guide marketing strategy.

Loading page 12...

p. 38
PPT 1-19
PPT 1-20
PPT 1-21
p. 39
Discuss customer relationship management and identify
strategies for creating value for customers and capturing
value from customers in return.
ENGAGING CUSTOMERS AND MANAGING
CUSTOMER RELATIONSHIPS
Customer Relationship Management
Customer relationship management is perhaps the most
important concept of modern marketing.
Customer relationship management is the overall process
of building and maintaining profitable customer relation-
ships by delivering superior customer value and satisfaction.
It deals with all aspects of acquiring, keeping, and growing
customers.
Relationship Building Blocks: Customer Value and
Satisfaction
The key to building lasting customer relationships is to
create superior customer value and satisfaction.
Customer-perceived value is the customer’s evaluation of
the difference between all the benefits and all the costs of a
market offering relative to those of competing offers.
Customers often do not judge values and costs “accurately”
or “objectively.”
Instead, customers act on perceived value.
Customer satisfaction depends on the product’s perceived
performance relative to a buyer’s expectations.
If the product’s performance falls short of expectations, the
customer is dissatisfied. If performance matches
expectations, the customer is satisfied. If performance
exceeds expectations, the customer is highly satisfied or
delighted.
Although the customer-centered firm seeks to deliver high
customer satisfaction relative to competitors, it does not
attempt to maximize customer satisfaction.
Learning Objective
4
p. 38
Key Term:
Customer
relationship
management
p. 38
Key Term:
Customer-perceived
value
p. 39
Key Term:
Customer
satisfaction
p. 39
Photo: Steinway
piano

Loading page 13...

p. 40
A company can always increase customer satisfaction by
lowering its price or increasing its services. But this may
result in lower profits.
The purpose of marketing is to generate customer value
profitably.
Customer Relationship Levels and Tools
Companies can build customer relationships at many levels.
At one extreme, a company with many low-margin
customers may seek to develop basic relationships with
them.
At the other extreme, in markets with few customers and
high margins, sellers want to create full partnerships with
customers.
Many companies offer frequency marketing programs that
reward customers who buy often or in large quantities.
Companies sponsor club marketing programs that offer
members special benefits and create member communities.
(For example, Harley-Davidson sponsors the Harley
Owners Group [H.O.G.].)
p. 39
Photo: L.L.Bean
p. 39
Photo: JetBlue
p. 41
PPT 1-22
Customer Engagement and Today’s Digital and Social
Media
Yesterday’s big companies focused on mass marketing to
all customers at arm’s length.
Today’s companies are building deeper, more direct, and
more lasting relationships with carefully selected customers.
The new marketing is customer-engagement marketing,
fostering direct and continuous customer involvement in
shaping brand conversations, brand experiences, and brand
community. It involves using a rich mix of online, mobile,
and social media marketing that promotes engagement and
conversation.
Customer-engagement marketing goes beyond just selling a
brand to consumers. Its goal is to make the brand a
p. 41
Photo: Customer
engagement
marketing

Loading page 14...

p. 42
PPT 1-23
meaningful part of consumers’ conversations and lives.
The burgeoning Internet and social media have given a huge
boost to customer-engagement marketing.
Today’s consumers are better informed, more connected,
and more empowered than ever before. Newly empowered
consumers have more information about brands, and they
have a wealth of digital platforms for airing and sharing
their brand views with others.
The marketing world is now embracing customer-managed
relationships.
Companies can no longer rely on marketing by intrusion.
Companies must practice marketing by attraction—creating
market offerings and messages that involve consumers
rather than interrupt them.
Consumer-generated marketing has become a significant
marketing force. Here, consumers themselves are playing a
bigger role in shaping their own brand experiences and
those of others.
As consumers become more connected and empowered, and
as the boom in digital and social media technologies
continues, consumer brand engagement, whether invited or
not, will be an important marketing force. Brands must
embrace this trend or risk being left behind.
p. 41
Key Term:
Customer-
engagement
marketing
p.42
Key Term:
Consumer-
generated marketing
p. 43
Photo: Mountain
Dew
➢ Resources, Applications
Use Real Marketing 1.1 and 1.2 here
Use Video Case here
Use Small Group Assignment 1 and 2 here
Use Additional Project 3 here
Use Think-Pair-Share 4 here
p. 43
PPT 1-24
Partner Relationship Management
Today’s marketers know they must work closely with others
inside and outside the company to jointly bring more value
to customers.
Today, firms are linking all departments in the cause of
creating customer value. In today’s connected world, every
functional area in the organization can interact with
p. 43
Key Term: Partner
relationship
management

Loading page 15...

customers.
Rather than assigning only sales and marketing people to
customers, firms are forming cross-functional customer
teams.
Marketing channels consist of distributors, retailers, and
others who connect the company to its buyers.
The supply chain describes a longer channel, stretching
from raw materials to components to final products that are
carried to final buyers.
Through supply chain management, many companies today
are strengthening their connections with partners all along
the supply chain.
p. 44
p. 44
PPT 1-25
CAPTURING VALUE FROM CUSTOMERS
The first four steps in the marketing process involve
building customer relationships. The final step involves
capturing value in return.
By creating superior customer value, the firm creates highly
satisfied customers who stay loyal and buy more.
Creating Customer Loyalty and Retention
The aim of customer relationship management (CRM) is to
create both customer satisfaction and customer delight.
This means that companies must aim high in building
customer relationships.
Customer delight creates an emotional relationship with a
product or service, not just a rational preference.
Companies are realizing that losing a customer means
losing more than a single sale. It means losing customer
lifetime value.
p. 44
Photo: Stew
Leonard
p. 44
Key Term:
Customer lifetime
value
➢ Resources, Applications
Use Marketing by the Numbers here
Use Individual Assignment 1 here

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