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1. 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.

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marketing managing profitable customer relationships

1

Marketing:

Managing Profitable Customer Relationships

road map previewing the concepts
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.
what is marketing
What Is Marketing?
  • Simple Definition: Marketing is managing profitable customer relationships.

Goals:

  • Attract new customers by promising superior value.
  • Keep and grow current customers by delivering satisfaction.
marketing old vs new
Marketing Old vs. New

Old view of marketing:

Making a sale -- “Telling and Selling”

New view of marketing:

Satisfying customer needs

marketing defined
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.

slide6

Construct a marketing program

that delivers superior value

Understand the marketplace and customer needs and wants

Design a customer-driven marketing

strategy

Build profitable relationships and create

customer delight

Capture value from customers to create profits and customer equity

A Simple Model of the Marketing Process

Create value for customers and build customer relationships

Capture value from customers in return

this is a need
This Is a Need

Needs - state of felt deprivation including physical, social, and individual needs.

types of needs
Types of Needs
  • Physical:
    • Food, clothing, shelter, safety
  • Social:
    • Belonging, affection
  • Individual:
    • Learning, knowledge, self-expression
this is a want
This Is a Want

Wants - form that a human need takes, as shaped by culture and individual personality.

this is demand

Wants

Buying Power

This Is Demand

“Demand”

need want fulfillment
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.
what satisfies consumers needs and wants
What Satisfies Consumers’ Needs and Wants?

Products

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

Persons

Places

Organizations

Information

Ideas

Services

Activity or Benefit Offered for Sale That is Essentially

Intangible and Does Not Result in the Ownership of Anything

product as an idea
Product as an Idea

Products do not have to be physical objects. Here the “product” is an idea—protecting animals.

marketing myopia
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.”
value and satisfaction

Performance

Expectation

Performance

Expectation

8

10

10

8

Value and Satisfaction

If performance is lower than expectations, satisfaction is low.

If performance is higher than expectations, satisfaction is high.

exchange vs transaction
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.
what is a market
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.
marketing management
Marketing Management
  • The art and science of choosing target markets and building profitable relationships with them.

Questions to ask:

  • What customers will we serve?

What is our target market?

  • How can we best serve these customers?

What is our value proposition?

segmentation and target marketing

Market Segmentation:

Divide the market into segments of customers

Target Marketing:

Select the segment to cultivate

Segmentation and Target Marketing

#1

#2

interactive student assignment
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?
marketing management23

Demarketing

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

Marketing Management

Demand

Management

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

value proposition
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

marketing management philosophies
Marketing Management Philosophies

Customer-Driven

Societal Marketing Concept

Marketing Concept

Selling Concept

Product Concept

Production Concept

customer driven marketing
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.

slide29

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.
the marketing mix

Product

Price

Customer

Needs

Promotion

Distribution

The Marketing Mix
customer relationship management
Customer Relationship Management
  • The process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.
customer perceived value
Customer Perceived Value
  • Customer’s evaluation of the difference between all the benefits and all the costs of a marketing offer relative to those of competing offers.
customer perceived value33
Customer Perceived Value

Is FedEx’s 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? Don’t worry. There’s a FedEx for that.”

customer satisfaction
Customer Satisfaction
  • Dependent on the product’s perceived performance relative to a buyer’s expectations.
customer relationship levels
Customer Relationship Levels

Full Partnership

Continuum

Basic Relationship

loyalty and retention

Financial Benefits

Social Benefits

Structural Ties

Loyalty and Retention

Focus on Profitable Customers

partner relationship marketing

Partners Inside the Firm

  • All employees customer focused
  • Teams coordinate efforts toward customers
Partner Relationship Marketing
  • Partners Outside the Firm
  • Supply chain management
  • Strategic alliances
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.

Customer Loyalty & Retention
customer lifetime value
Customer Lifetime Value

To keep customers coming back, Stew Leonard’s has created the “Disneyland of dairy stores.” Rule #1—the customer is always right. Rule #2—if the customer is ever wrong, reread Rule #1.

customer equity
Customer Equity
  • Customer equity is the total combined customer lifetime values of all the company’s customers.
customer relationship groups
Customer Relationship Groups

Butterflies

True Friends

Good fit between company’s offerings and customer’s needs; high profit potential

Good fit between company’s offerings and customer’s needs; highest profit potential

High

Profitability

Strangers

Barnacles

Little fit between company’s offerings and customer’s needs; lowest profit potential

Limited fit between company’s offerings and customer’s needs; low profit potential

Low

Long-term customers

Short-term customers

Projected loyalty

the internet
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.
the new digital age
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.

new marketing landscape
New Marketing Landscape

Rapid Globalization

Not-for-Profit

Marketing

Ethics & Social

Responsibility

New World of Marketing

Relationships

rest stop reviewing the concepts
Rest Stop: Reviewing 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 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.