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Marketing: Managing Profitable Customer Relationships

ROAD MAP: Previewing the Concepts

Define marketing and outline the steps in the marketing
process. Explain the importance of understanding customers and the marketplace, and identify the five core marketplace concepts. Identify the key elements of a customer-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Discuss customer relationship management and strategies for building lasting customer relationships. Describe the major trends and forces that are changing the marketing landscape in this new age of relationships.

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What Is Marketing?
Simple Definition: Marketing is
managing profitable customer relationships. Goals: 1. Attract new customers by promising superior value. 2. Keep and grow current customers by delivering satisfaction.

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Marketing Old vs. New

Old view of marketing: Making a sale -- Telling and Selling
New view of marketing: Satisfying customer needs

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Marketing Defined A social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others.
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A Simple Model of the Marketing Process

Create value for customers and build customer relationships

Understand the marketplace and customer needs and wants

Design a customerdriven marketing strategy

Construct a marketing program that delivers superior value

Capture value from customers in return

Build profitable relationships and create customer delight

Capture value from customers to create profits and customer equity

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What are Consumers Needs, Wants, and Demands?

This Is a Need
Needs - state of felt deprivation including physical, social, and individual needs.

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Types of Needs
Physical:
Food, clothing, shelter, safety

Social:
Belonging, affection

Individual:
Learning, knowledge, self-expression

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This Is a Want
Wants - form that a human need takes, as shaped by culture and individual personality.
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This Is Demand
Wants Buying Power

Demand

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Need / Want Fulfillment

Needs and Wants

Fulfilled through a

Marketing Offer :
Some combination of products, services, information, or experiences offered to a market to satisfy a need or want.

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What Satisfies Consumers Needs and Wants?

Anything that can be Offered to a Market to Satisfy a Need or Want

Products

Persons

Places

Organizations

Information

Ideas

Activity or Benefit Offered for Sale That is Essentially Intangible and Does Not Result in the Ownership of Anything
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Services

Product as an Idea
Products do not have to be physical objects. Here the product is an ideaprotecting animals.

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Marketing Myopia
Sellers pay more

attention to the specific products they offer than to the benefits and experiences produced by the products. They focus on the wants and lose sight of the needs.

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Value and Satisfaction

Expectation
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Performance
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Expectation
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Performance
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If performance is lower than expectations, satisfaction is low. If performance is higher than expectations, satisfaction is high.
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Exchange vs. Transaction

Exchange:
Act of obtaining a desired object from someone by offering something in return.

Transaction:
A trade of values between two parties. One party gives X to another party and gets Y in return. Can include cash, credit, check, or barter.
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What is a Market?
The set of actual

and potential buyers of a product.

These people share

a need or want that can be satisfied through exchange relationships.

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Elements of a Modern Marketing System

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Marketing Management
The art and science of choosing target
markets and building profitable relationships with them.

Questions to ask: 1. What customers will we serve?

What is our target market?

2. How can we best serve these customers?

What is our value proposition?
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Segmentation and Target Marketing

#1
Market Segmentation:
Divide the market into segments of customers

#2

Target Marketing:
Select the segment to cultivate
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Interactive Student Assignment

Pair up with another student and share
your thoughts with one another on the following items:
To what market segments do you think you belong? What personal traits, variables, or factors characterize you as belonging to those segments? 1-22

Marketing Management
Demand Management
Finding and increasing demand, also changing or reducing demand, such as in demarketing.

Demarketing

Temporarily or permanently reducing the number of customers or shifting their demand.

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Value Proposition

The set of benefits

or values a company promises to deliver to consumers to satisfy their needs.

It cleans and freshens like sunshine!

www.gainlaundry.com
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Marketing Management Philosophies

Societal Marketing Concept

Marketing Concept
Selling Concept Product Concept Production Concept
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Marketing and Sales Concepts Contrasted

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Customer-Driven Marketing
How many of us would have thought to ask for a wearable PC? Marketers must often understand customer needs even better than customers themselves do.

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Societal Marketing Concept

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Interactive Student Assignment

Pair up with another student and share
your thoughts with one another on the following topic:
Based on your personal experience, discuss with your partner ways you have seen organizations implement the societal marketing concept.
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The Marketing Mix

Product
Price Customer Needs Promotion

Distribution

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Customer Relationship Management

The process of

building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.

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Customer Perceived Value

Customers evaluation
of the difference between all the benefits and all the costs of a marketing offer relative to those of competing offers.

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Customer Perceived Value

Is FedExs service worth the higher price? FedEx thinks so. It promises reliability, speed, and peace of mind. FedEx ads say Need to get it there or else? Dont worry. Theres a FedEx for that.
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Customer Satisfaction
Dependent on the

products perceived performance relative to a buyers expectations.

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Customer Relationship Levels

Basic Relationship

Continuum

Full Partnership

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Loyalty and Retention

Financial Benefits Social Benefits

Structural Ties

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Partner Relationship Marketing

Partners Inside the Firm
1. All employees customer focused 2. Teams coordinate efforts toward customers

Partners Outside the Firm

1. Supply chain management 2. Strategic alliances

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Customer Loyalty & Retention

Customer Lifetime Value
The entire stream of purchases that the customer would make over a lifetime of patronage.

Share of Customer
The share a company gets of the customers purchasing in their product categories.

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Customer Lifetime Value

To keep customers coming back, Stew Leonards has created the Disneyland of dairy stores. Rule #1the customer is always right. Rule #2if the customer is ever wrong, reread Rule #1.
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Customer Equity

Customer equity

is the total combined customer lifetime values of all the companys customers.

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Customer Relationship Groups

Butterflies
High Good fit between companys offerings and customers needs; high profit potential

True Friends
Good fit between companys offerings and customers needs; highest profit potential

Profitability

Strangers
Low Little fit between companys offerings and customers needs; lowest profit potential Short-term customers

Barnacles
Limited fit between companys offerings and customers needs; low profit potential Long-term customers
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Projected loyalty

The Internet
The Internet has been hailed as the
technology behind a New Economy. Marketing applications include:
Click-and-mortar companies Click-only companies Business-to-business e-commerce

Business-to-business transactions online

are expected to reach $4.3 trillion in 2005. By 2005, 500,000 companies will use the Internet to do business.
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The New Digital Age

The recent technology boom has had a major impact on the ways marketers connect with and bring value to their customers.

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New Marketing Landscape

Rapid Globalization

Not-for-Profit Marketing

Ethics & Social Responsibility

New World of Marketing Relationships

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Rest Stop: Reviewing the Concepts

1. Define marketing and outline the steps in the

2.
3. 4. 5.

marketing process. Explain the importance of understanding customers and the marketplace, and identify the five core marketplace concepts. Identify the key elements of a customer-driven marketing strategy and discuss marketing management orientations that guide marketing strategy. Discuss customer relationship management and strategies for building lasting customer relationships. Describe the major trends and forces that are changing the marketing landscape in this new age of relationships.
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