Marketing: Managing Profitable Customer Relationships.

Marketing: Managing Marketing: Managing Profitable Customer Profitable Customer

RelationshipsRelationships

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Strong sales, no Strong sales, no profitsprofitsCustomer-driven Customer-driven to its coreto its coreEach customer’s Each customer’s experience is uniqueexperience is unique

Provides great Provides great selection, good selection, good value, discovery value, discovery as well as as well as convenienceconvenienceA true online A true online communitycommunity

cAmazon

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What is Marketing?

Marketing is managing profitable Marketing is managing profitable customer relationshipscustomer relationships Attracting new customersAttracting new customers Retaining and growing current Retaining and growing current

customerscustomers

““Marketing” is NOT synonymous with Marketing” is NOT synonymous with “sales” or “advertising”“sales” or “advertising”

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What is Marketing?

Kotler’s social definition:Kotler’s social definition: ““Marketing is a social and managerial Marketing is a social and managerial

process by which individuals and process by which individuals and groups obtain what they need and groups obtain what they need and want through creating and want through creating and exchanging products and value with exchanging products and value with others.”others.”

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What Can Be

Marketed?

GoodsGoodsServicesServicesPlacesPlacesIdeasIdeasEventsEventsPersonsPersonsPropertiesPropertiesOrganizationsOrganizationsInformationInformationExperiencesExperiencesWhat is being

marketed in this ad?

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Figure 1-1:

Core Marketing Concepts

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ResellersResellers are a primary are a primary market for Nike’s market for Nike’s products. products.

Describe the Describe the exchange exchange processprocess between Nike between Nike and resellers.and resellers.

Think beyond the obvious.Think beyond the obvious.

Discussion Question

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Figure 1-2:

Elements of a Modern Marketing System

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Marketing Management

Marketing managementMarketing management is “the art is “the art and science of choosing target and science of choosing target markets and building profitable markets and building profitable relationships with them.”relationships with them.” Creating, delivering and Creating, delivering and

communicating superior communicating superior customcustomeer value is key.r value is key.

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Customer Management:Customer Management: Marketers select customers that Marketers select customers that

can be served well and profitably.can be served well and profitably.

Demand Management:Demand Management: Marketers must deal with different Marketers must deal with different

demand states, ranging from no demand states, ranging from no demand to too much demand.demand to too much demand.

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Demarketing: Commuter Connections promotes the use of mass transit and carpooling as an alternative to driving alone.

CommuterConnections

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Production Concept

Product Concept

Selling Concept

Marketing Concept

Societal Marketing Concept

Management Orientations

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Figure 1-3: The Selling and Marketing

Concepts Contrasted

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Figure 1-4: Considerations Underlying the

Societal Marketing Concept

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CRM

Customer relationship Customer relationship management (also called CRM) management (also called CRM) is defined as:is defined as:

““the overall process of building the overall process of building and maintaining profitable and maintaining profitable customer relationships by customer relationships by delivering superior customer delivering superior customer value and satisfaction.”value and satisfaction.”

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CRM

It costs 5 to 10 times MORE to It costs 5 to 10 times MORE to attract a new customer than it does attract a new customer than it does to keep a current customer satisfied.to keep a current customer satisfied.Marketers must be Marketers must be concerned with the concerned with the lifetime value of the lifetime value of the customercustomer..

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CRM

Attracting, Attracting, retaining and retaining and growing growing customerscustomers

Building Building relationships and relationships and customer equitycustomer equity

Customer value and satisfactionCustomer value and satisfaction Perceptions are keyPerceptions are key Created by meeting/ exceeding Created by meeting/ exceeding

expectationsexpectations

Loyalty and retentionLoyalty and retention Many benefits of loyalty Many benefits of loyalty Increases as satisfaction levels Increases as satisfaction levels

increaseincrease Delighting consumers should be Delighting consumers should be

the goalthe goal

Growing customer shareGrowing customer share Cross-sellingCross-selling

Key ConceptsKey Concepts

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CRM

Customer equityCustomer equity Total combined Total combined

customer lifetime customer lifetime values of all customersvalues of all customers

Measures firm’s Measures firm’s performance, but in a performance, but in a manner that looks to manner that looks to the futurethe future




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CRM

Customer relationship Customer relationship levels and toolslevels and tools Target market typically Target market typically

dictates type of relationshipdictates type of relationship Basic relationshipsBasic relationships Full relationshipsFull relationships

Customer loyalty and Customer loyalty and retention programsretention programs

Adding financial benefitsAdding financial benefits Adding social benefitsAdding social benefits Adding structural tiesAdding structural ties




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Marketing Challenges

Technological advances, rapid Technological advances, rapid globalization, and continuing globalization, and continuing social and economic shifts are social and economic shifts are causing marketplace changes.causing marketplace changes.

Major marketing developments Major marketing developments can be grouped under the theme can be grouped under the theme of of ConnectingConnecting..

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Figure 1-6: Today’s Marketing

Connections

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Visit the “Our Values” and “About Us” sections of The Body Shop’s web site.

How might the values espoused by the company influence the manner in which the Body Shop . . .

• Chooses their strategic partners?• Advertises fragrances to consumers?• Develops new products?• How might these decisions in turn impact “the bottom line”?

The Body Shop

Connecting with Values . . .

The Body Shop

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Reconnecting with Teens

The Problem:The Problem:

Campfires and cookies weren’t Campfires and cookies weren’t cutting it with today’s teens. cutting it with today’s teens. Scouting was perceived as Scouting was perceived as NOT cool and primarily for NOT cool and primarily for younger kids.younger kids.

Modernizing the Modernizing the Girl Scouts

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Goal:Goal: Adapt the Adapt the curriculum to the needs curriculum to the needs of teensof teens

Changed the “Product”:Changed the “Product”: Added activities related Added activities related to technology and to technology and adventure sports: adventure sports: rock-climbing, surfing, rock-climbing, surfing, martial artsmartial arts

Modernizing the Girl Scouts The Solution

Goal:Goal: Promote a Promote a cooler image for the cooler image for the Girl ScoutsGirl Scouts

Campaign Theme:Campaign Theme: “Join Troop 2002”“Join Troop 2002”

Target Market:Target Market: Diverse -- Girls of all Diverse -- Girls of all ages and all racesages and all races

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TV TV AdAd Execution: Execution: Japanimation style Japanimation style visuals and throbbing visuals and throbbing electronica music were electronica music were used to make scouting used to make scouting seem “hip”.seem “hip”.

Taglines:Taglines: “Campfire “Campfire songs, the remix”; “Be songs, the remix”; “Be part of a girl band”.part of a girl band”.

TV Vehicles:TV Vehicles: MTV, MTV, VH1, Animal Planet, VH1, Animal Planet, Nickelodeon (in TN, Nickelodeon (in TN, KY, and AL regions).KY, and AL regions).

Other Media Used:Other Media Used: Stylized posters sent Stylized posters sent to schools, churches, to schools, churches, community centers; community centers; interactive media.interactive media.

Modernizing the Girl Scouts The Solution

Company and Company and Marketing StrategyMarketing Strategy

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Known for films, Known for films, animation, theme parks animation, theme parks and customer orientationand customer orientationParks offer a variety of Parks offer a variety of attractions as well as attractions as well as cleanliness, order, and cleanliness, order, and warmthwarmth

Satisfying the Satisfying the customer is customer is everyone’s jobeveryone’s job

Disney has grown Disney has grown via diversificationvia diversification

Sales and net Sales and net income have fallenincome have fallen

cWalt Disney

Discussion:Discussion: How Can Disney Recover?How Can Disney Recover?

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Disney companies

ABCABC16 cable networks16 cable networks ESPNESPN, Disney Channel, Toon Disney, , Disney Channel, Toon Disney,

SoapNET, A&E, the History Channel, SoapNET, A&E, the History Channel, LifetimeLifetime Television, Television, E! Entertainment E! Entertainment

4 TV production companies4 TV production companies8 movie production companies8 movie production companies Walt DisneyWalt Disney, , TouchstoneTouchstone Pictures, Pictures,

Hollywood Pictures, Hollywood Pictures, Miramax FilmsMiramax Films

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More Disney companies

5 magazine publishing groups5 magazine publishing groups5 music labels5 music labels19 Internet groups19 Internet groupsDisney InteractiveDisney InteractiveThe The Disney StoreDisney StoreDisney Cruise LinesDisney Cruise LinesTwo sports FranchisesTwo sports Franchises

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Strategic Planning

Strategic planning is defined as:Strategic planning is defined as: ““The process of developing and The process of developing and

maintaining a strategic fit between maintaining a strategic fit between the organization’s goals and the organization’s goals and capabilities and its capabilities and its changing marketing opportunities.”changing marketing opportunities.”

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Nervewire Video Clip

Consultants may offer valuable services and expertise during the strategic planning process.

BusinessNow

Click the picture above to play video

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Figure 2-1:

Steps in the Strategic Planning Process

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Mission statements Mission statements should . . .should . . . serve as a guide for what the organization serve as a guide for what the organization

wants to accomplish.wants to accomplish. be “market-oriented” rather than “product-be “market-oriented” rather than “product-

oriented”.oriented”. be neither too narrow, nor too broad.be neither too narrow, nor too broad. fit with the market environment.fit with the market environment. be motivating.be motivating.

Strategic Planning

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Strategic Planning

Mission statements guide the Mission statements guide the development of objectives and development of objectives and goals.goals. Objectives are developed at each level Objectives are developed at each level

in the organization hierarchy.in the organization hierarchy. Strategies are developed to Strategies are developed to

accomplish these objectives.accomplish these objectives.

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Google.comGoogle.com is one of is one of the leading Internet the leading Internet search engines. search engines.

Construct a market-Construct a market-oriented mission oriented mission statement that fits statement that fits this business.this business.

Discussion Question

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Strategic Planning

Business portfolio:Business portfolio: “the collection of businesses “the collection of businesses and products that make and products that make up the company.”up the company.” Designing the businessDesigning the business

portfolio is a key step in portfolio is a key step in the strategic planning the strategic planning process.process.

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Strategic Planning

Step 1: Step 1: Analyze the Analyze the current business current business portfolioportfolio

Step 2: Step 2: Shape the future Shape the future business portfoliobusiness portfolio

Identify strategic business Identify strategic business units (SBUs)units (SBUs)Assess each SBU:Assess each SBU: The BCG growth-share The BCG growth-share

matrix classifies SBUs matrix classifies SBUs into one of four into one of four categories using:categories using:Market growth rate Market growth rate The SBU’s relative market The SBU’s relative market

share within the market.share within the market.

Portfolio DesignPortfolio Design

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Figure 2-2:

Growth-Share Matrix

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Strategic Planning

Step 1: Step 1: Analyze the Analyze the current business current business portfolioportfolio

Step 2:Step 2: Shape the future Shape the future business portfoliobusiness portfolio

Determine the future role of Determine the future role of each SBU and choose the each SBU and choose the appropriate resource appropriate resource allocation strategy:allocation strategy: BuildBuild HoldHold HarvestHarvest DivestDivest

SBUs change positions SBUs change positions over timeover time

Portfolio DesignPortfolio Design

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Strategic Planning

Matrix approaches to formal planning Matrix approaches to formal planning share many problems:share many problems: Difficult, time-consuming, Difficult, time-consuming,

and costly to implement.and costly to implement. Focus only on current Focus only on current

businesses.businesses. Too strongly emphasize Too strongly emphasize

market share growth or market share growth or growth via diversification.growth via diversification.

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Strategic Planning

Designing the business portfolio Designing the business portfolio also involves:also involves: Developing strategies for growth by Developing strategies for growth by

identifying, evaluating, and selecting identifying, evaluating, and selecting promising new market opportunities.promising new market opportunities.

Developing strategies for downsizing Developing strategies for downsizing the business portfolio.the business portfolio.

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Figure 2-3:

Product / Market Expansion Grid

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Marketing plays a key role in Marketing plays a key role in the strategic planning process.the strategic planning process.

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Planning Marketing

Marketers must Marketers must practice Customer practice Customer Relationship Relationship Management (CRM) Management (CRM) andand Partner Partner Relationship Relationship Management.Management.

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Planning Marketing

Partner Relationship ManagementPartner Relationship Management Partnering with other departments Partnering with other departments

in the company in the company Partnering with other firms in the marketing Partnering with other firms in the marketing

system system

Partner Relationship Management helps Partner Relationship Management helps to build a superior to build a superior value delivery-networkvalue delivery-network..

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Figure 2-4:

The Marketing Process

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The strategic planning The strategic planning and business portfolio and business portfolio analysis processes analysis processes help to identify and help to identify and evaluate marketing evaluate marketing opportunities.opportunities.

The purpose of the The purpose of the marketing process is marketing process is to help the firm plan to help the firm plan how to capitalize on how to capitalize on these opportunities.these opportunities.

Key ElementsKey Elements

Analyzing marketing Analyzing marketing opportunitiesopportunities

Selecting target Selecting target marketsmarkets

Developing the Developing the marketing mixmarketing mix

Managing the Managing the marketing effortmarketing effort

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Key ElementsKey Elements The segmentation The segmentation process divides the process divides the total market into total market into market segments.market segments.

Target marketingTarget marketing chooses which chooses which segment(s) are segment(s) are pursued.pursued.

Market positioningMarket positioning for the product is for the product is then determined.then determined.

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Positioning

Market positioning is not restricted to physical goods. Identify the “competing products” of relevance to the Marble Collegiate Church.

What clear, distinctive, and desirable place in the consumer’s mind does the ad at left attempt to create?

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Figure 2-5:

The Marketing Mix

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Marketing analysisMarketing analysis Provides information Provides information

helpful in planning, helpful in planning, implementation, and implementation, and controlcontrol

Marketing planningMarketing planning Strategies and tacticsStrategies and tactics

Marketing Marketing implementationimplementation Turns plans into actionTurns plans into action

Marketing controlMarketing control Operating controlOperating control Strategic controlStrategic control





Key ElementsKey Elements

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Figure 2-6:

Managing the Marketing Effort

Marketing in the Marketing in the Digital AgeDigital Age

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Invented discount Invented discount brokerage categorybrokerage category

First U.S. major player to First U.S. major player to go onlinego online

Initially offered two-tiered Initially offered two-tiered trading system trading system to protect profits / stop to protect profits / stop cannibalizationcannibalization

Later became first true Later became first true click-and-mortar full-click-and-mortar full-service brokerage service brokerage

Now world’s largest Now world’s largest e-commerce site e-commerce site

85% online trades; 21% 85% online trades; 21% of trade volume; Strong of trade volume; Strong stock returnstock return

cCharles Charles Schwab

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Music Down loaders

NapsterNapster today today

KaZaAKaZaA

eDonkeyeDonkey

Bit TorrentBit Torrent

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Down Load for a feeMusicNet MusicNet sitesite AOL/TimeWarner, Berlesman, Emi, and AOL/TimeWarner, Berlesman, Emi, and

Real NetworksReal NetworksPressplay Pressplay sitesite Universal, SonyUniversal, SonyMusicNow MusicNow sitesiteRhapsody (listen.com) Rhapsody (listen.com) sitesiteiTunes iTunes sitesite AppleApple

Monthly fees and a per song chargeMonthly fees and a per song charge

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Figure 3-1:

Forces Shaping the Internet Age

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Major Forces Shaping the Digital Age

CustomizationCustomization and Customerization and Customerization Information businesses are at Information businesses are at

the heart of the New Economy the heart of the New Economy Has enhanced marketer’s Has enhanced marketer’s

ability to customize ability to customize and “customerize” and “customerize” product offerings product offerings

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Marketing Strategy in the Digital Age

E-business: E-business: uses uses

electronic electronic means and means and platforms to platforms to conduct conduct business.business.

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Buyer Benefits of E-Commerce: Buyer Benefits of E-Commerce: ConvenienceConvenience Easy and privateEasy and private Greater Greater productproduct access/selection access/selection Access to comparative information Access to comparative information Interactive and immediateInteractive and immediate

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Seller Benefits of E-Commerce: Seller Benefits of E-Commerce: RelationshipRelationship buildingbuilding Reduced costsReduced costs Increased speed and Increased speed and

efficiencyefficiency FlexibilityFlexibility GlobalGlobal access access

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Figure 3-3:

Types of E-Marketers

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Conducting E-Commerce

Dot.coms failed for many reasonsDot.coms failed for many reasons Lack of planning and researchLack of planning and research Overemphasis Overemphasis

on acquisition on acquisition Poor web site Poor web site

design and design and distribution distribution problemsproblems

Low marginsLow margins

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Click-and-Mortar CompaniesClick-and-Mortar Companies Channel conflict was initially a concern Channel conflict was initially a concern

E-commerce often E-commerce often created new buyers, created new buyers, rather than rather than cannibalizing cannibalizing existing onesexisting ones

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Click-and-Mortar CompaniesClick-and-Mortar Companies Many firms now enjoy greater success Many firms now enjoy greater success

than their click-only competitionthan their click-only competition Trusted brand names, greater Trusted brand names, greater

financial resources, larger financial resources, larger customer base, industry customer base, industry knowledge and strong supplier knowledge and strong supplier relationships were key advantages relationships were key advantages

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Figure 3-4:

Setting Up For E-Marketing

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Corporate web sitesCorporate web sites Build Build goodwillgoodwill and and

relationships; relationships; generate excitementgenerate excitement

Marketing web sitesMarketing web sites Engage Engage consumersconsumers

and attempt to and attempt to influence purchaseinfluence purchase

Creating web sitesCreating web sites

Placing online ads Placing online ads and promotionsand promotions

Creating or using Creating or using web communitiesweb communities

Using E-mail and Using E-mail and webcastingwebcasting

E-MarketingE-Marketing

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Online forms of ads Online forms of ads and promotionsand promotions BannerBanner ads/tickersads/tickers SkyscrapersSkyscrapers InterstitialsInterstitials Browser adsBrowser ads Content Content

sponsorshipssponsorships MicrositesMicrosites Viral marketingViral marketing

Future of online adsFuture of online ads






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Findwhat.com Video Clip

Findwhat.com is a search engine company. Paid search is a key revenue tool.

BusinessNow

Click the picture above to play video

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BMWFilms.Com

The Problem:The Problem:

BMW’s market research revealed BMW’s market research revealed that the brand was not appealing to that the brand was not appealing to younger luxury car buyers. Also, younger luxury car buyers. Also, competition was increasing.competition was increasing.

Viral Marketing . . .Viral Marketing . . .Creating a Marketing EventCreating a Marketing Event

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Objectives:Objectives: Make BMW cool and Make BMW cool and

relevant to 25-44 year-relevant to 25-44 year-old buyers new to the old buyers new to the luxury-car market luxury-car market without alienating without alienating existing customersexisting customers

Capture qualified Capture qualified buyers and ultimately buyers and ultimately increase salesincrease sales

BMWfilms.com The Solution

Target Market:Target Market: Doesn’t watch a lot of Doesn’t watch a lot of

TV; tends to resent TV; tends to resent marketingmarketing

Thinks of technology Thinks of technology as their friendas their friend

85% of this group use 85% of this group use the Web to research the Web to research cars before visiting cars before visiting dealershipsdealerships

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BMWfilms.comBMWfilms.com Instead Instead of using traditional TV of using traditional TV advertising, BMW advertising, BMW launched five short launched five short Internet films in April Internet films in April 2001, featuring edgy 2001, featuring edgy stars, action-oriented stars, action-oriented plots, and famous plots, and famous directors.directors.

Web Promotion:Web Promotion: Three Three months prior to the months prior to the premiere, Internet-premiere, Internet-movie rumor sites, movie rumor sites, chat rooms, and fan chat rooms, and fan sites were seeded sites were seeded with information. with information. These efforts formed These efforts formed the core of viral the core of viral marketing campaign.marketing campaign.


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Off-line PR Strategy:Off-line PR Strategy: PR firm pitched the PR firm pitched the

films as reviewable films as reviewable movies to movies to TimeTime, , Entertainment Entertainment WeeklyWeekly, , NY TimesNY Times, , and generated and generated reviews in the film reviews in the film section.section.

Off-line Ad Off-line Ad Strategy:Strategy: BMW ran 15-second BMW ran 15-second

teasers resembling teasers resembling movie trailers on movie trailers on A&E, Bravo, A&E, Bravo, & & Independent Film Independent Film ChannelChannel with tag, with tag, “Now playing at “Now playing at BMWfilms.com”BMWfilms.com”


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As of March 2002, As of March 2002, over 11 million people over 11 million people had logged onto the had logged onto the BMWfilms web site.BMWfilms web site.Traditional buyers Traditional buyers (median age 32, HH (median age 32, HH income $88,000) were income $88,000) were majority of those majority of those requesting more requesting more information.information.

85% perception increase 85% perception increase among film viewers vs. among film viewers vs. nonviewersnonviewersPlanned dealer visits for Planned dealer visits for target market film target market film viewers rose 550%viewers rose 550%12.5% sales increase in 12.5% sales increase in 2001 despite no major 2001 despite no major product launches; 3-product launches; 3-series increase of 37% in series increase of 37% in 4 months that films ran.4 months that films ran.

BMWfilms.com The Results

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Web communities Web communities allow members with allow members with special interests to special interests to exchange viewsexchange views Social communitiesSocial communities Work-related Work-related

communitiescommunities

Marketers find well-Marketers find well-defined demographics defined demographics and shared interests and shared interests useful when marketinguseful when marketing






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E-mail marketingE-mail marketing Key tool for B2B and Key tool for B2B and

B2C marketingB2C marketing Clutter is a problemClutter is a problem Enriched forms ofEnriched forms of

e-mail attempt to e-mail attempt to break through clutterbreak through clutter

WebcastingWebcasting Auto downloading of Auto downloading of

customized content customized content to recipients’ PCsto recipients’ PCs






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Is this the Future of E-mail?

What are the drawbacks of using the enriched e-mail format for your marketing messages?

E-mail is the golden child of E-mail is the golden child of web marketing due to its:web marketing due to its:

• low cost per contactlow cost per contact• quick response timequick response time• response tracking abilityresponse tracking ability• response ratesresponse rates

Enriched e-mail executions Enriched e-mail executions (see ad at left) are on the rise. (see ad at left) are on the rise.

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Promise and Challenges of E-Commerce

The PromiseThe Promise The future The future

of B2B of B2B E-commerce E-commerce is brightis bright

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The Promise The Promise A few click-only companies may A few click-only companies may

succeedsucceed Most companies will integrate Most companies will integrate

online marketing into the overall online marketing into the overall marketing mix, rather than treat it marketing mix, rather than treat it as a separate component.as a separate component.

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Challenges: The Web’s Darker SideChallenges: The Web’s Darker Side Few B2C companies Few B2C companies

are profitable:are profitable: Limited exposure, Limited exposure,

and skewed and skewed demographics demographics

Navigating the Navigating the web is often web is often problematic problematic

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Challenges: The Web’s Darker Side Challenges: The Web’s Darker Side Online privacy Online privacy and and security concernssecurity concerns Internet fraudInternet fraud The digital divideThe digital divide Access by Access by

vulnerable or vulnerable or unauthorized unauthorized groupsgroups

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My Space.com:

A web site designed for people to…* Chat online* Post profiles* Meet people* Business networking* Matchmaking * Find lost friends* Connect with family

OR…

“One stop shopping for pedophiles”

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My Space Or My Stalker?

Robert Wise used myspace to look for sex, and found Robert Wise used myspace to look for sex, and found a 14 year old female. He is now charged with sexual a 14 year old female. He is now charged with sexual assault.assault.

Majalie Cajuste is grieving the murder of her Majalie Cajuste is grieving the murder of her daughter Judy, who reportedly told friends she met a daughter Judy, who reportedly told friends she met a man in his 20’s through myspace.com.man in his 20’s through myspace.com.

In California 15 year old Kayla Reed was active on In California 15 year old Kayla Reed was active on myspace until the day she disappeared.myspace until the day she disappeared.

26 year old Jeffrey Neil Perters was arrested last 26 year old Jeffrey Neil Perters was arrested last month for sexually assaulting a myspace user.month for sexually assaulting a myspace user.

Center for Missing and exploited children reported more than 2,600 incidents last year of adults using the internet to entice children.

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Found on MySpace.Com““Drink a 40, smoke a bowl, sex is good, life is Drink a 40, smoke a bowl, sex is good, life is great we are the class of 2008”great we are the class of 2008”

-Perfect target for a predator!-Perfect target for a predator!

A survey is conducted that asks for responses on A survey is conducted that asks for responses on issues like drinking, drug use and skinny dipping.issues like drinking, drug use and skinny dipping.

Kids younger then 14 lying about their age.Kids younger then 14 lying about their age.

Explicit photosExplicit photos

Detailed information: Address, Phone numbers, Detailed information: Address, Phone numbers, school schedules, drug and alcohol use, virginity school schedules, drug and alcohol use, virginity etc.etc.

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Joanna“Wanting something I can’t have”

Female

25 years old

Union county, New Jersey

United States

Marketing: Managing Profitable Customer Relationships.

Documents

Transcript of Marketing: Managing Profitable Customer Relationships.