Chapter-12 Building Customer Relationships Through Effective Marketing

1. Chapter-12 Building Customer Relationships Through Effective Marketing Dr. GehanShanmuganathan, (DBA)

2. Apple rings up $ 43 billion in annual revenue, selling 10 million Macintosh computers, 8 million iPods, and 20 million iPhones every year

3. Learning Objectives

4. Learning Objectives • Understand the meaning of marketing and the importance of management of customer relationships. • Explain how marketing adds value by creating several forms of utility. • Trace the development of the marketing concept and understand how it is implemented. • Understand what markets are and how they are classified. • Identify the four elements of the marketing mix and be aware of their importance in developing a marketing strategy.

5. Learning Objectives (cont’d) • Explain how the marketing environment affects strategic market planning. • Understand the major components of a marketing plan. • Describe how market measurement and sales forecasting are used. • Distinguish between a marketing information system and marketing research. • Identify the major steps in the consumer buying decision process and the sets of factors that may influence this process.

6. What is marketing?

7. Marketing • The activity, set of institutions and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large

8. Managing Customer Relationships

9. Managing Customer Relationships • Relationship marketing- establishing long-term, mutually satisfying buyer-seller relationships • Customer relationship management (CRM)- using information about customers to create marketing strategies that develop and sustain desirable customer relationship • Customer lifetime value- measure of a customer’s worth (sales minus costs) to business over one’s life time

10. Utility: The Value Added by Marketing

11. Utility: The Value Added by Marketing • Utility- the ability of a good or service to satisfy a human need • Form utility- utility created by converting production inputs into finished products • Place utility- utility created by making product available at a location convenient for customer to purchase • Time utility- utility created by making a product available when customers wish to purchase it • Possession utility- utility created by transferring title (ownership) of a product to a buyer

12. The Marketing Concept

13. The Marketing Concept • A business philosophy that firm should provide goods and services that satisfy customer’s needs through a coordinated set of activities that allow the firm to achieve its objectives • To achieve success, a business must • Talk to its potential customers to assess their needs • Develop a good or service to satisfy those needs • Continue to seek ways to provide customer satisfaction

14. Evolution of Marketing Concept after Industrial Revolution

15. Production Concept “ The production concept holds that consumers will favour those products that are widely available and low in cost. Managers of production oriented organisations concentrate on achieving high production efficiency and wide distribution coverage”. • Companies that follow this concept is called production oriented

16. Product Concept “The product concept contends that consumers will favour those products that offer the most quality, performance or innovative features. Managers in these product oriented organisations focus their energy on making superior products and improving them over time.” • A company following this concept is called “Myopic”

17. Selling Concept “The selling concept holds that consumers, if left alone, will ordinarily not buy enough of the organisations products. The organisation must therefore undertake an aggressive selling and promotional effort.” • A company following this concept is called sales oriented

18. Marketing Concept The marketing concept rests on four pillars • Target market – This is where the marketing effort is directed towards a chosen market sector. • Customer needs - The marketing activities start with the customers needs in mind. • Coordinated marketing – This is where a coordinated effort is put in meeting the requirements of the customers across various functions of the organisation. • Profitability– The ultimate outcome would be profits for a business organisation or an excess in terms of effort for non profit organisations.

19. Societal Marketing Concept Societal Marketing is a management process responsible for identifying, anticipating and satisfying customer requirements at a profit in a socially acceptable manner.  

20. Implementing the Marketing Concept

21. Implementing the Marketing Concept • Obtain information about present and potential customers • Their needs; how well those needs are being satisfied; how products might be improved; customer opinions about the firm • Pinpoint specific needs and potential customers toward which to direct marketing activities and resources

22. Implementing the Marketing Concept (cont’d) • Mobilize marketing resources to • Provide a product that will satisfy customers • Price the product at an acceptable and profitable level • Promote the product to potential customers • Ensure distribution for product availability when and where wanted • Obtain information on the effectiveness of the marketing effort and modify efforts as necessary

23. Markets and Their Classification

24. Markets and Their Classification • Market- group of individuals or organizations, or both, that need products in a given category and that have the ability, willingness, and authority to purchase such products • Consumer markets (B to C) • Business-to-business (industrial- B to B) markets

25. Developing Marketing Strategies • Marketing strategy • Consists of • The selection and analysis of a target market • The creation and maintenance of an appropriate marketing mix (a combination of product, price, distribution, and promotion developed to satisfy a particular target market)

26. Developing Marketing Strategies (cont’d) • Target market selection and evaluation • Target market- a group of individuals or organizations for which the firm develops and maintains a marketing mix suitable for the specific needs and preferences of that group • Market segment- a group of individuals or organizations within a market that share one more common characteristics • Market segmentation- the process of dividing a market into segments

27. Undifferentiating Seg 1 One Marketing Mix Seg 2 Seg 3 Differentiating Marketing Mix 1 Seg 1 Seg 2 Marketing Mix 2 Seg 3 Marketing Mix 3 Concentrated One Marketing Mix Seg 1

28. Marketing environment

29. Definition of Marketing Environment A company’s marketing environment consists of the actors and forces external to the marketing management function of the firm that impinge on the marketing management’s ability to develop and maintain successful transaction with its target customers. - Kotler : 2001:42 -

30. Marketing Environment Internal Environment External Environment 5 M’s 7 S’s Micro Environment Macro Environment Customers, Distributors, Suppliers & Competitors PESTEEL Factors

31. Developing a Marketing Plan

32. Developing a Marketing Plan • A written document that specifies an organization’s resources, objectives, strategy, and implementation and control efforts to be used in marketing a specific product or product group • Elements of a marketing plan • Executive summary • Environmental analysis • Strengths and weaknesses • Opportunities and threats • Marketing objectives • Marketing strategies • Marketing implementation • Evaluation and control

33. Market Measurement and Sales Forecasting • Sales forecast- an estimate of the amount of a product that an organization expects to sell during a certain period of time based on a specific level of marketing effort • Importance of measuring sales potential

34. Marketing Information • Marketing information system- a system for managing marketing information that is gathered continually from internal and external sources • Internal data sources • External data sources • Outputs

35. Marketing Information (cont’d) The six steps of marketing research • Define the problem • Make a preliminary investigation • Plan the research • Gather factual information • Interpret the information • Reach a conclusion

36. Buying Behavior

37. Types of Buying Behavior • Buying behavior- the decisions and actions of people involved in buying and using products • Consumer buying behavior- the purchasing of products for personal or household use, not for business purposes • Business buying behavior- the purchasing of products by producers, resellers, governmental units, and institutions

38. Buying Process Need Recognition Identification of Alternatives Evaluation of Alternatives Purchase Decision Post Purchase Evaluation

39. Write five key things (areas) that you can critically remember in today’s discussion

40. What we discussed today..

41. What we discussed today.. • Understand the meaning of marketing and the importance of management of customer relationships. • Explain how marketing adds value by creating several forms of utility. • Trace the development of the marketing concept and understand how it is implemented. • Understand what markets are and how they are classified. • Identify the four elements of the marketing mix and be aware of their importance in developing a marketing strategy.

42. What we discussed today.. (cont’d) • Explain how the marketing environment affects strategic market planning. • Understand the major components of a marketing plan. • Describe how market measurement and sales forecasting are used. • Distinguish between a marketing information system and marketing research. • Identify the major steps in the consumer buying decision process and the sets of factors that may influence this process.