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Marketing: Managing Profitable Customer Relationships
•Chapter 1
•Powerpoint slides
•Extendit! version
•Instructor name
•Course name
•School name
•Date
Principles of Marketing: 6th Canadian Edition
Principles of Marketing: 6th Canadian Edition
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Learning Objectives
• After studying this chapter, you should be able to:– Define what marketing is and discuss its core concepts
– Define marketing management and compare the five marketing management orientations
– Discuss customer relationship management and strategies for building lasting customer relationships
– Analyze the major challenges facing marketers heading into the new “connected” millennium
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Opening Vignette: VanCity Credit Union
• Founded in 1946 in Vancouver, British Columbia
• In 2003: 286,000 members in 39 branches
• Credit unions are cooperatives, owned by members• Profits returned as dividends or improved
services/prices
• Triple bottom line
• Measures success by:– Customer satisfaction
– Profits
– Community impact
– Member involvement
– Environmental sustainability
– Growth in new members
• Uses non-traditional marketing tools
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Marketing Defined
• Marketing: – Social and managerial process
– Individuals and groups obtain what they need– Creating and exchanging
– Products and values with others
• Needs:– Felt deprivation
• Wants:– Form of needs shaped by culture
and personality
• Demands:– Wants backed by buying power
Figure 1.1
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Products, Services, and Experiences
• Marketing offer: – Address needs with a value proposition
– Set of benefits promised to customers to satisfy needs
– Can include:– Products
– Services
– Persons
– Places
– Organizations
– Information
– Ideas
Figure 1.1
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Value and Satisfaction
• Value: – Benefits gained versus costs of obtaining product
• Satisfaction:– Degree of meeting consumer’s expectations– Expectations formed from:
• Previous experience
• Opinions of others
• Marketing information
• Competitive information and promises
– Satisfied customers buy again and tell others
– Dissatisfied customers switch and tell others
Figure 1.1
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Exchange, Transactions, and Relationships
• Exchange:– Obtaining a desired object
– By offering something in return
• Transaction:– Two things of value
– Agreed-upon conditions
– Time/place of agreement
• Exchange relationships:– Want to build strong economic
and social connections
– Consistently delivering superior value
Figure 1.1
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Marketing Management
• Market:– A physical place where buyers and sellers gather
– Set of actual or potential buyers of a product
• Marketing management:– Choosing target markets
– Building profitable relationships with them
• Demarketing:– Reduce, not destroy
demand
– Temporarily or permanently
Figure 1.2
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Marketing Management Orientations
• Production concept:– Consumers will favour available/affordable products
– Focus on improving production/distribution efficiency
– Still useful when demand exceeds supply
• Product concept:– Consumers favour products
with the best:• Quality
• Performance
• Features
– Focus on continuous product improvements
Figure 1.3
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Marketing Management Orientations
• Selling concept:– Products need large-scale selling/promotion effort
– Focus on the hard sell
– Unsought goods, or when company has overcapacity
• The marketing concept:– Achieve organizational
objectives by
– Determining needs and wants of target consumers
– Delivering satisfaction
– Better than competitors
Figure 1.3
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Societal Marketing Concept
• Societal marketing concept:– The marketing concept focuses on short-run wants
– May be in conflict with consumer long-run welfare
– Determine needs/wants of target markets– Deliver desired satisfactions
– More efficiently and effectively than competitors
– In a way that maintains or improve consumer’s and society’s well-being
Figure 1.4
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Customer Relationship Management
• Customer relationship management:– Process of building/maintaining profitable customer relationships
– Delivering superior customer value and satisfaction
• Customer lifetime value:– Value of the entire purchase stream
– Customer makes over a lifetime
– Focus on the long-term
– Very few new customers, just someone else’s
– More efficient to look after your own customers
– Than to try to find new ones
Figure 1.5
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Customer Satisfaction and Loyalty
• Customer perceived value:– Difference between total customer value
– And total customer cost
– To the customer, perception is reality
• Customer satisfaction:– Extent a product’s perceived
performance
– Matches expectations
– Maximizing customer satisfaction may not be possible or will be cost prohibitive
Figure 1.5
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Customer Satisfaction and Loyalty
• Customer loyalty:– Highly satisfied customers are less price sensitive
– Speak favourably about the company and products
– Remain loyal for longer period of time– Link between satisfaction
and loyalty is positive, but
– Different for some industries
– To the customer, slight changes in satisfaction may trigger switching
– Companies need to aim high
– Focus on greater “share of wallet”
Figure 1.5
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Building Customer Relationships
• Customer equity:– Total combined customer lifetime values
– Of all of the company’s customers
• Relationship tools:– Levels from developing basic
relationships to creating full partnerships
– Financial benefits: frequency marketing programs
– Social benefits: club marketing
– Adding structural ties
– Focus on profitable customers
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Today’s Marketing Connections
• Single theme: connecting• The Internet
• One to one marketing
• Selective relationship management
• Increase share of customer
• Partner relationship management
• Supply chain management
• Strategic alliances
Figure 1.6
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Marketing Connections in Transition (Table 1.1)
Old marketing thinking:• Sales/product centered…
• Practice mass marketing…
• Focus on product/sales…
• Make sales to customers…
• Get new customers…
• Grow share of market…
• Serve any customer…
• Use mass media…
• Standardized products…
• Sales/marketing responsible for customer satisfaction/value…
• Go it alone…
• Market locally…
• Profit responsibility…
• Corporations…
• Use marketplaces…
New marketing thinking:• Market/customer centered
• Selected market segments
• Focus on customer satisfaction/value
• Develop customer relationships
• Keep old customers
• Grow share of customer
• Serve profitable customers
• Connect with customers directly
• Customized products
• Enlist all departments to deliver customer satisfaction/value
• Partner with others
• Market locally and globally
• Social/environmental responsibility
• Non-profits
• Use marketspaces
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In Conclusion…
• The learning objectives for this chapter were:– Define what marketing is and discuss its core concepts
– Define marketing management and compare the five marketing management orientations
– Discuss customer relationship management and strategies for building lasting customer relationships
– Analyze the major challenges facing marketers heading into the new “connected” millennium