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CUSTOMER RELATIONSHIPS
Chapter 01
LEARNING GOALS
1. Define marketing and the marketing process.
Need
5 Core Concepts State of felt deprivation
Needs, wants, and demands Human have many complex
Marketing offers: including needs including physical
products, services and need for clothing, warmth
experiences and safety needs, social
Value and satisfaction needs for belonging and
affection, and individual
Exchange, transactions and
relationships needs for knowledge & self
expression
Markets
Marketers don’t create need,
they are basic part of human
makeup
CONT.….
5 Core Concepts
Needs, wants, and demands Wants
The form of needs shaped
Marketing offers: including
by culture and individual
products, services and
experiences personality.
Value and satisfaction
Demands
Exchange, transactions and Human wants which are
relationships
backed by buying power
Markets
CONT.….
5 Core Concepts
• Outstanding marketers
Needs, wants, and demands go to great length to
Marketing offers: including learn about and
products, services and understand their
experiences customers’ needs,
Value and satisfaction wants and demands.
Exchange, transactions and
relationships • They train salespersons
Markets and other frontline
personnel to be on the
outlook for unfulfilled
customer needs.
CONT.….
5 Core Concepts
Needs, wants, and demands Marketing offerings
Marketing offers: including Consumers needs and wants
products, services and are fulfilled through market
experiences offerings
Value and satisfaction
Exchange, transactions and “Some combination of
relationships products, services,
Markets information or
experiences offered to
the market to satisfy a
need or want”
CONT.….
5 Core Concepts
Needs, wants, and demands Product: Tangible / physical
Marketing offers: including goods
products, services and Services: Intangible & do not
experiences result in the ownership of
Value and satisfaction anything but experiences. E.g.
banking, hotel stays, air travel
Exchange, transactions and
relationships etc.
Experience: Tourism, the
Markets
marketing offering is an
entire travel experience
CONT.….
5 Core Concepts
Needs, wants, and demands Idea: Besides promoting
Marketing offers: including its TV news channel,
products, services and DawnNews markets the
experiences idea that an enlightened
Value and satisfaction state needs good
Exchange, transactions and governance
relationships Also involves marketing
Markets of ideas such as awareness
about AIDS
CONT.….
Example:
5 Core Concepts Kodak was torn between going
Needs, wants, and demands digital and sacrificing money on
Marketing offers: including camera film or staying with films
products, services and and getting left behind in digital
experiences technology
Value and satisfaction
Exchange, transactions and In 1976 had a 89% market share of
relationships photographic film sales in the
United States.
Markets
Kodak began to struggle
financially in the late 1990s as a
result of the decline in sales of
photographic film
CONT.….
5 Core Concepts
Value & satisfaction
Needs, wants, and demands How do consumer choose
Marketing offers: including among many marketing
products, services and offerings?
experiences Customers form expectation
Value and satisfaction about the value &
Exchange, transactions and satisfaction that various
relationships market offering will deliver
Markets & buy accordingly. Satisfied
customers rebuy whereas
dissatisfied ones switch
brand
CONT.….
5 Core Concepts
Example:
Needs, wants, and demands
FedEx customers gain
Marketing offers: including many benefits.
products, services and
experiences Fast and reliable package
delivery. Customers might
Value and satisfaction
also retain some status and
Exchange, transactions and image value. Using FedEx
relationships usually makes both the
Markets package sender and the
receiver feel more
important.
CONT.….
5 Core Concepts
Exchanges & Relationship
Needs, wants, and demands “The act of obtaining a desired object
Marketing offers: including from someone by offering something
products, services and in return”
experiences
Marketer tries to bring about a
Value and satisfaction
response to some market
Exchange, transactions and offering. The response maybe
relationships more than simply buying or
Markets trading products & services.
CONT.….
5 Core Concepts
Relationship marketing
Needs, wants, and demands “Process of creating,
Marketing offers: including maintaining and
products, services and enhancing strong, value
experiences laden relationships with
Value and satisfaction customers and other
Exchange, transactions and stakeholders”
relationships “Maintain good
Markets relationships with
valuable customers and
profitable transactions
will continue”
CONT.….
5 Core Concepts
Market
Needs, wants, and demands
“Set of all actual and
Marketing offers: including potential buyers of a
products, services and
experiences product or service”
• These buyers share a
Value and satisfaction
particular need or want
Exchange, transactions and that can be satisfied
relationships through exchange
Markets relationships
• The concepts of
exchange and
relationships lead to the
concept of a market
A MODERN MARKETING SYSTEM
A MODERN MARKETING SYSTEM
1. Company & competitors research the market & interact with
customers to understand their needs.
2. They create & send their market offerings to the customers, either
directly or through marketing intermediaries. All of the parties in
the system are affected by major environmental forces including
demographic, economic, physical, technological, political, legal,
social, cultural etc.
Example: Wal-Mart cannot fulfill its promise of low prices unless its
suppliers provide merchandise at low costs.
STEP 2: DESIGNING A CUSTOMER DRIVEN MARKETING STRATEGY
1. Product concept
2. Production concept
3. Selling concept
4. Marketing concept
1. Production concept
“This concept holds that the consumers will favor products that
are available and highly affordable”
• Management should focus on improving production and
distribution
• Example: Computer maker Lenovo dominates the highly
competitive, price sensitive Chinese PC market through low labor
costs, high production efficiency and mass distribution
CONT.…
Disadvantage of production concept!!
It consist of the firm’s marketing mix, the set of marketing tools the
firm uses to implement its marketing strategy
These marketing tools are classified into 4 broad groups, called the 4
Ps of marketing: product, price, place and promotion.
Product: To deliver on its value proposition, the firm must first create
need satisfying market offering (product)
Price: It must decide how much it must charge for the offering
Place: How it will make the offering available to target consumers
Promotion: It must communicate with target customers about the
offering and persuade them of its merits
STEP 4: BUILDING CUSTOMER RELATIONSHIPS
CRM – Customer relationship management
“The overall process of building and maintaining profitable customer
relationships by delivering superior customer value and satisfaction”
Customer value
A customer buys from the firm that offers the highest customer perceived
value – 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.
Customer Satisfaction
The extent to which a product’s perceived performance matches 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.
STEP 4: BUILDING CUSTOMER RELATIONSHIPS
Customer Relationship Levels & Tools: Not all customers are equal
A company with many low margin customers may seek to develop
basic relationships with them.
Example: Unilever Limited does not phone or call on all of its surf
consumers to get to know them personally. They create relationships
through brand-building advertising, sales promotions, and its Web site.
In markets with few customers and high margins, seller wants to
create full partnership with key customers.
Many companies now offer frequency marketing programs that
reward customers who buy frequently or in large amounts.
Example: Airlines offers frequent flyer programs, hotels give room
upgrades to their frequent guests and supermarkets give percentage
discounts to “very important customers”
Companies also sponsor club marketing programs that offer members
special benefits and create member communities.
THE CHANGING NATURE OF CUSTOMER RELATIONSHIPS
Today’s companies are building deeper, more direct, and more lasting
relationships with more carefully selected customers