Marketing: Managing Profitable Customer Relationships

Chapter 1

What is Marketing?Marketing Defined: Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging value with othersMarketing is about managing profitable customer relationshipsAttracting new customersRetaining and growing current customers

Goal 1: Define marketing and the marketing process.

The Marketing ProcessA Five-Step ProcessUnderstand the marketplace and customer needs and wantsDesign a customer-driven marketing strategyConstruct a marketing program that delivers superior valueBuild profitable relationships and create customer delightCapture value from customers to create profits and customer quality

Goal 1: Define marketing and the marketing process.

Core Marketing Concepts

Understanding the MarketplaceNeeds, wants, and demandsMarketing offers: including products, services and experiencesValue and satisfaction Exchange, transactions and relationships Markets

NeedState of felt deprivationExample: Need food

WantsThe form of needs as shaped by culture and the individualExample: Want a Big Mac

DemandsWants which are backed by buying power

Core ConceptsGoal 2: Identify the five core marketplace concepts.

Understanding the MarketplaceNeeds, wants, and demandsMarketing offers: including products, services and experiencesValue and satisfaction Exchange, transactions and relationships Markets

Marketing offerCombination of products, services, information or experiences that satisfy a need or wantOffer may include services, activities, people, places, information or ideas

Core ConceptsGoal 2: Identify the five core marketplace concepts.

Understanding the MarketplaceNeeds, wants, and demandsMarketing offers: including products, services and experiencesValue and satisfaction Exchange, transactions and relationships Markets

ValueCustomers form expectations regarding valueMarketers must deliver value to consumers

SatisfactionA satisfied customer will buy again and tell others about their good experience

Core ConceptsGoal 2: Identify the five core marketplace concepts.

Understanding the MarketplaceNeeds, wants, and demandsMarketing offers: including products, services and experiencesValue and satisfaction Exchange, transactions and relationships Markets

ExchangeThe act of obtaining a desired object from someone by offering something in returnOne exchange is not the goal, relationships with several exchanges are the goalRelationships are built through delivering value and satisfaction

Core ConceptsGoal 2: Identify the five core marketplace concepts.

Understanding the MarketplaceNeeds, wants, and demandsMarketing offers: including products, services and experiencesValue and satisfaction Exchange, transactions and relationships Markets

MarketSet of actual and potential buyers of a productMarketers seek buyers that are profitable

Core ConceptsGoal 2: Identify the five core marketplace concepts.

Elements of a Modern Marketing System

Marketing ManagementMarketing management is the art and science of choosing target markets and building profitable relationships with them.This definition must include answers to two questions:

What customers will we serve?How can we serve these customers best?Goal 3: Identify elements of a customer-driven strategy.

Selecting Customers and Creating ValueCustomer Management What customers will we serve?Marketers select customers that can be served profitably

Value PropositionHow can we serve these customers best?Includes the set of benefits or values a company promises to deliver to consumers to satisfy their needs

Goal 3: Identify elements of a customer-driven strategy.

Marketing Management

Production Concept

Product ConceptSelling ConceptMarketing ConceptSocietal Marketing ConceptManagement Orientations

Marketing Management Philosophies

Production ConceptProduct ConceptSelling ConceptMarketing ConceptSocietal Marketing Concept

Consumers favor products that are available and highly affordable.Improve production and distribution.

Consumers favor products that offer the most quality, performance, and innovative features.

Consumers will buy products only if the company promotes/ sells these products.

Focuses on needs/ wants of target markets & delivering satisfaction better than competitors.

Focuses on needs/ wants of target markets & delivering superior value.

The Selling and Marketing Concepts Contrasted

The Marketing PlanTransforms the marketing strategy into actionIncludes the marketing mix and the 4Ps of marketingProductPricePlacePromotion

Goal 3: Identify elements of a customer-driven strategy.

Building Customer RelationshipsCRM Customer relationship management The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. It deals with all aspects of acquiring, keeping and growing customers.Goal 4: Discuss CRM and capturing value.

Value and SatisfactionPerceived ValueThe customers evaluation of the difference between benefits and costs.Customers often do not judge values and costs accurately or objectively.

Customer SatisfactionProducts perceived performance relative to customers expectations.

Goal 4: Discuss CRM and capturing value.

Not All Customers are EqualBasic Relationships Low-margin customers

Full Partnerships Key customers

Selective relationship management Weeding out unprofitable customers

Goal 4: Discuss CRM and capturing value.

Capturing Value from CustomersCustomer Loyalty and RetentionShare of CustomerCustomer EquityCustomer delight leads to emotional relationships and loyaltyCustomer Lifetime Value shows true worth of a customerKey ConceptsGoal 4: Discuss CRM and capturing value.

Capturing Value from CustomersCustomer Loyalty and RetentionShare of CustomerCustomer EquityShare of customers purchase in a product category.Achieved through offering greater variety, cross-sell and up-sell strategies.Key ConceptsGoal 4: Discuss CRM and capturing value.

Capturing Value from CustomersCustomer Loyalty and RetentionShare of CustomerCustomer EquityThe combined customer lifetime values of all current and potential customers.Measures a firms performance, but in a manner that looks to the future.Choosing the best customers is key

Key ConceptsGoal 4: Discuss CRM and capturing value.

Marketing LandscapeDigital ageGlobalizationEthics and social responsibilityNot-for-profit marketingMarketing relationshipsGrowth of the InternetAdvances in telecommunications, information, transportationCustomer research and trackingProduct developmentDistributionNew advertising tools24/7 marketing through the Internet

ChallengesGoal 5: Discuss trends and forces.

Marketing LandscapeDigital ageGlobalizationEthics and social responsibilityNot-for-profit marketingMarketing relationshipsGeographical and cultural distances have shrunkGreater market coverageMore options for purchasing and manufacturingIncreased competition from foreign competitors

ChallengesGoal 5: Discuss trends and forces.

Marketing LandscapeDigital ageGlobalizationEthics and social responsibilityNot-for-profit marketingMarketing relationshipsMarketers need to take great responsibility for the impact of their actionsCaring capitalism is a way to differentiate your company

ChallengesGoal 5: Discuss trends and forces.

Marketing LandscapeDigital ageGlobalizationEthics and social responsibilityNot-for-profit marketingMarketing relationshipsMany organizations are realizing the importance of strategic marketingPerforming artsGovernment agenciesCollegesHospitalsChurches

ChallengesGoal 5: Discuss trends and forces.

Marketing LandscapeDigital ageGlobalizationEthics and social responsibilityNot-for-profit marketingMarketing relationshipsProfits through managing long-term customer equityImprove customer knowledgeTarget profitable customersKeep profitable customers

ChallengesGoal 5: Discuss trends and forces.

What is Marketing

The process of building profitable customer relationships by creating value for customers and capturing value in return