Chapter One Marketing: Managing Profitable Customer Relationships.
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Transcript of Chapter One Marketing: Managing Profitable Customer Relationships.
Chapter One
Marketing: Managing Profitable Customer Relationships
Prentice Hall, Inc. Copyright 2007 1-2
Roadmap: Previewing the Concepts
1. Define marketing and the marketing process.
2. Explain the importance of understanding customers and identify the five core marketplace concepts.
3. Identify the elements of a customer-driven marketing strategy and discuss the marketing management orientations.
4. Discuss customer relationship management and creating value for and capturing value from customers.
5. Describe the major trends and forces changing the marketing landscape.
Prentice Hall, Inc. Copyright 2007 1-3
Creating Value NASCAR sells the
experience – in-car cameras, wholesome family orientation.
NASCAR.com engages fans via content.
Success has been achieved by creating lasting customer relationships.
NASCAR – What is its secret?NASCAR – What is its secret?Case StudyCase Study
Capturing Value NASCAR is the 2nd
highest rated sport on TV. Fans are young, affluent,
and family oriented, spending nearly $700 annually on NASCAR merchandise.
Fans are loyal to sport and NASCAR fans are 3 times as likely to seek out sponsors’ products than are nonfans.
Prentice Hall, Inc. Copyright 2007 1-4
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.
Prentice Hall, Inc. Copyright 2007 1-5
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.
OLD Viewof Marketing:
Making a Sale –“Telling & Selling”
New View of Marketing:
Satisfying customer needs
NEW View of Marketing:
Satisfying Customer Needs
Prentice Hall, Inc. Copyright 2007 1-6
The Marketing Process
A simple model of the marketing process:– Understand the marketplace and customer needs
and wants.– Design a customer-driven marketing strategy.– Construct a marketing program that delivers
superior value.– Build profitable relationships and create customer
delight.– Capture value from customers to create profits
and customer quality.
Prentice Hall, Inc. Copyright 2007 1-7
Needs, Wants, & Demands
Need: State of felt deprivation including physical, social, and individual needs.– Physical needs:
• Food, clothing, shelter, safety– Social needs:
• Belonging, affection– Individual needs:
• Learning, knowledge, self-expression
Prentice Hall, Inc. Copyright 2007 1-8
Needs, Wants, & Demands
Wants: Form that a human need takes, as shaped by culture and individual personality.
Wants + Buying Power = Demand
Prentice Hall, Inc. Copyright 2007 1-9
Need / Want Fulfillment
Needs and wants are fulfilled through a Marketing Offer:– Some combination of products, services,
information, or experiences offered to a market to satisfy a need or want.
Prentice Hall, Inc. Copyright 2007 1-10
Need / Want Satisfiers
Products:– Persons– Places– Organizations– Information– Ideas
Services– Activity or benefit
offered for sale that is essentially intangible and does not result in ownership.
Brand Experiences: “. . . dazzle their senses, touch their hearts, stimulate their minds.”
Prentice Hall, Inc. Copyright 2007 1-11
Marketing Myopia
Marketing myopia occurs when 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.”
Prentice Hall, Inc. Copyright 2007 1-12
Value & Satisfaction
Care must be taken when setting expectations:– If performance is lower than expectations,
satisfaction is low.– If performance is higher than expectations,
satisfaction is high.
Prentice Hall, Inc. Copyright 2007 1-13
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, or check.
Prentice Hall, Inc. Copyright 2007 1-14
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.
Prentice Hall, Inc. Copyright 2007 1-15
Modern Marketing Systems
Main elements in a modern marketing system include:– Suppliers– Company (marketer)– Competitors– Marketing intermediaries– Final users
Prentice Hall, Inc. Copyright 2007 1-16
Marketing Management
The art and science of choosing target markets and building profitable relationships with them.– Requires that consumers and the
marketplace be fully understood
Prentice Hall, Inc. Copyright 2007 1-17
Marketing Management
Designing a winning marketing strategy requires answers to the following questions:
1. What customers will we serve?What is our target market?
2. How can we best serve these customers?What is our value proposition?
Prentice Hall, Inc. Copyright 2007 1-18
Segmentation & Target Marketing
Market Segmentation:– Divide the market into segments of
customers
Target Marketing:– Select the segment to cultivate
Prentice Hall, Inc. Copyright 2007 1-19
Marketing Management
Demand Management– Finding and
increasing demand, also changing or reducing demand, as in demarketing.
Demarketing– Temporarily or
permanently reducing the number of customers or shifting their demand.
Prentice Hall, Inc. Copyright 2007 1-20
Value Proposition
The set of benefits or values a company promises to deliver to consumers to satisfy their needs.– Value propositions dictate how firms will
differentiate and position their brands in the marketplace.
Prentice Hall, Inc. Copyright 2007 1-21
Marketing Management Philosophies
Production Concept Product Concept Selling Concept Marketing Concept Societal Marketing Concept
Prentice Hall, Inc. Copyright 2007 1-22
The Marketing Plan
Transforms the marketing strategy into action
Includes the marketing mix and 4 P’s of marketing:– Product– Price– Place (Distribution)– Promotion
Prentice Hall, Inc. Copyright 2007 1-23
Customer Relationship Management
The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.– Acquiring customers– Keeping customers– Growing customers
Prentice Hall, Inc. Copyright 2007 1-24
Customer Perceived Value
Customer’s evaluation of the difference between all of the benefits and all of the costs of a marketing offer relative to those of competing offers.
Prentice Hall, Inc. Copyright 2007 1-25
Customer Satisfaction
Dependent on the product’s perceived performance relative to a buyer’s expectations.– Customer satisfaction often leads to
consumer loyalty.– Some firms seek to DELIGHT customers
by exceeding expectations.
Prentice Hall, Inc. Copyright 2007 1-26
Customer Relationships
Loyalty and retention programs build relationships and may feature:– Financial Benefits
• EX: Frequency marketing programs– Social Benefits
• EX: Club marketing programs– Structural Ties
Focus is on relating directly to profitable customers, for the longterm.
Prentice Hall, Inc. Copyright 2007 1-27
Partner Relationship Marketing
Marketing partners help create customer value and assist in building customer relationships.
Partners inside the firm:– All employees customer focused– Teams coordinate efforts toward customers
Partners outside the firm:– Supply chain management– Strategic alliances
Prentice Hall, Inc. Copyright 2007 1-28
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.
Prentice Hall, Inc. Copyright 2007 1-29
Customer Equity
The combined discounted customer lifetime values of all the company’s current and potential customers.– Classify customers by loyalty and
potential profitability– Manage accordingly
Prentice Hall, Inc. Copyright 2007 1-30
The New Digital Age
Technology impacts the ways firms bring value to their customers.
Greater connectivity means greater access to information, faster travel and communication.
The Internet allows anytime, anywhere connections between firms and customers.– “Click-and-mortar” companies– “Click-only” companies– Business-to-business e-commerce
Prentice Hall, Inc. Copyright 2007 1-31
New Marketing Landscape
Rapid Globalization Ethics and Social Responsibility Not-for-Profit Marketing New World of Marketing Relationships
Prentice Hall, Inc. Copyright 2007 1-32
Rest Stop: Reviewing the Concepts
1. Define marketing and the marketing process.
2. Explain the importance of understanding customers and identify the five core marketplace concepts.
3. Identify the elements of a customer-driven marketing strategy and discuss the marketing management orientations.
4. Discuss customer relationship management and creating value for and capturing value from customers.
5. Describe the major trends and forces changing the marketing landscape.