Marketing: Managing Profitable Customer Relationships

Marketing: Managing Profitable Customer Relationships Chapter 1

Objectives • Be able to define marketing and discuss its core concepts. • Be able to define marketing management and compare the five marketing management orientations.

Objectives • Understand customer relationship management and strategies. • Realize the major challenges facing marketers in the new “connected” millennium.

1. Introduction • a. Today’s successful companies at all levels have one thing in common. • 1). All successful companies are: • a). Strongly customer focused. • b). Heavily committed to marketing.

b- To be successful an organization motivates everyone in the organization to produce superior value for their customers, leading to high levels of customer satisfaction.

What is Marketing? • Marketing is managing profitable customer relationships • Attracting new customers • Retaining and growing current customers • “Marketing” is NOT synonymous with “sales” or “advertising”

2. What is Marketing? • a. Creating customer value and satisfaction are at the very heart of modern marketing thinking and practice

2. What is Marketing? • b. A very simple definition of marketing is managing profitable customer relationships.

2. What is Marketing? • 1). The twofold goal of marketing is to attract new customers by promising superior value and to keep and grow current customers by delivering • satisfaction.

2). Sound marketing is critical to the success of every organization.

c. You already know a lot about marketing—it’s all around you.

Marketing Defined • d. Many people think of marketing only as selling and advertising. • 1). Marketing is no longer “telling and selling.” • 2). Today, marketing’s new sense is concerned with satisfying customer needs.

What is Marketing? • Kotler’s social definition: “Marketing is 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.”

Needs, Wants, and Demands • f. Human needs are the most basic concept underlying marketing. • -a human need is a state of felt deprivation

1). Humans have many complex needs. • a). Basic, physical needs for food, clothing, warmth, and safety. • b). Social needs for belonging and affection. • c). Individual needs for knowledge and self-expression.

2). These needs are part of the basic human makeup.

g. Another concept in marketing is human wants. A human want is the form that a human need takes as shaped by culture and individual personality. • h. Demands are human wants that are backed by buying power.

1). Consumers view products as bundles of benefits and choose products that give them the best bundle for their money

i. Outstanding marketing companies go to great lengths to learn about and understand their customer’s needs, wants, and demands.

Goods Services Experiences Events Persons Places Properties Organizations Information Ideas What is Marketing? Many Things Can Be Marketed!

Marketing Offers—Products, Services, and Experiences • j. Companies address needs by putting forth a value proposition, a set of benefits that they promise to consumers to satisfy their needs.

1). The value proposition is fulfilled through a marketing offer—some combination of products, services, information, or experiences offered to a market to satisfy a need or want.

2). The concept of product is not limited to physical objects and can include experiences, persons, places, organizations, information, and ideas.

3). Be careful of paying attention to the product and not the benefit being satisfied. • 4). “Marketing myopia” is caused by shortsightedness or losing sight of underlying customer needs by only focusing on existing wants

5). Smart marketers create brand meaning and brand experiences for consumers.

Needs, wants, and demands Marketing offers: including products, services and experiences Value and satisfaction Exchange, transactions and relationships Markets What is Marketing? Core Marketing Concepts

Value and Satisfaction • k. Customer value is the difference between the values that the customer gains from owning and using a product and the costs of obtaining the product. Customers form expectations about the value of various marketing offers and buy accordingly.

l. Customer satisfaction depends on a product’s perceived performance in delivering value relative to a buyer’s expectations. Customer satisfaction is a key influence on future buying behavior

1). Marketers must be careful to set the right level of expectations. • 2). Customer value and customer satisfaction are key building blocks for developing and managing customer relationships.

Exchanges, Transactions, and Relationships • m. Marketing occurs when people decide to satisfy needs and wants through exchange. Exchange is the act of obtaining a desired object from someone by offering something in return.

n. Whereas exchange is a core concept of marketing, a transaction (a trade of values between two parties) is marketing’s unit of measurement. Most involve money, a response, and action.

o. Marketing consists of actions taken to build and maintain desirable exchange relationships with target audiences involving a product, service, idea, or other object.

Markets • p. The concepts of exchange and relationships lead to the concept of a market. market is the set of actual and potential buyers of a product.

1). Originally a “market” was a place where buyers and sellers gathered to exchange goods (such as a village square). • 2). Economists use the term to designate a collection of buyers and sellers who transact in a particular product class (as in the grain or housing market).

3). Marketers see buyers as constituting a market and sellers constituting an industry. • 4). Marketers are keenly interested in markets

Marketing q. The concept of markets brings one full circle to the concept of marketing.

1). Sellers must search for buyers, identify their needs, design good products and services, set prices for them, promote them, and store and deliver them. • 2). A modern marketing system includes all of the elements necessary to bring buyers and sellers together. This might include such activities as product development, research, communication, distribution, pricing, and service.

3). Each of the major actors in a marketing system adds value for the next level of the system. There is often critical interdependency among network members.

Marketing Management • Marketing management is “the art and science of choosing target markets and building profitable relationships with them.” • Creating, delivering and communicating superior customer value is key.

1). Marketing management involves managing demand, which in turn involves managing customer relationships

Marketing Management • Customer Management: • Marketers select customers that can be served well and profitably. • Demand Management: • Marketers must deal with different demand states ranging from no demand to too much demand.

Customer and Demand Management • b. Marketing management is concerned not only with finding and increasing demand, but also with changing or even reducing it.

1). Demarketing’s aim is to reduce demand temporarily or permanently (move traffic away from a popular tourist attraction during peak demand times). • 2). In reality, marketing anagement is customer management and demand management

Production concept Product concept Selling concept Marketing concept Marketing Management Marketing Management Management Orientations • Societal marketing concept

4. Marketing Management Orientations • a. There are five alternative concepts under which organizations conduct their marketing activities: the production, product, selling, marketing, and societal marketing concepts.

The Production Concept • b. The production concept holds that consumers will favor products that are available and highly affordable and that management should, therefore, focus on improving production and distribution efficiency. This is one of the oldest philosophies that guides sellers

c. The production concept is useful when: • 1). Demand for a product exceeds the supply. • 2). The product’s cost is too high and improved productivity is needed to bring it down.

d. The risk with this concept is in focusing too narrowly on company operations. Do not ignore the desires of the market. This concept can lead to “marketing myopia.”

The Product Concept • e. The product concept states that consumers will favor products that offer the most quality, performance, and features, and that the organization should, therefore devote its energy to making continuous product improvements.

1). Some manufacturers mistakenly believe that if they “build a better mousetrap,”consumers will beat a path to their door just for their product. • 2). The product concept can also lead to “marketing myopia,” the failure to see the challenges being presented by other products.

Marketing: Managing Profitable Customer Relationships