1 marketing: managing profitable customer relationships chapter 1

1

Marketing: Managing

Profitable Customer Relationships

Chapter 1

Learning Goals1. 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

What is Marketing? Marketing Defined:

“The process by which companies create value for the customers and build strong customer relationships in order to capture value from customers in return”

Marketing is about managing profitable customer relationships

The twofold goal of marketing is- Attracting new customers Retaining and growing current customers

Goal 1: Define marketing and the marketing process.

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 relationshi

ps and create

customer delight

Capture value from

customers to

create profits

and customer quality

Create value for customers and build customer relationships

Capture value from customers in return

Goal 1: Define marketing and the marketing process.

Needs, wants, and demands Need

State of felt deprivation Example: Need food

Wants The form needs as shaped by culture and the

individual Example: Want a Big Mac

Demands Wants which are backed by buying power

Understanding the Marketplace and customer needs

Understanding the Marketplace and customer needs Marketing offers:

Products Services Events Experiences Persons Places Ideas Organizations Information

Understanding the Marketplace and customer needs Value and satisfaction Value

Customer-perceived value Customer’s evaluation of the difference between all the

benefits and all the cost of a market offering relative to those of competing products.

Customers form expectations regarding value Marketers must deliver value to consumers

Satisfaction Customer satisfaction

The extent to which a product’s perceived performance matches a buyer’s expectations

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

Understanding the Marketplace and customer needs Exchange, transactions and relationships Exchange

The act of obtaining a desired object from someone by offering something in return

One exchange is not the goal, relationships with several exchanges are the goal

Relationships are built through delivering value and satisfaction

Markets Market

Set of actual and potential buyers of a product Marketers seek buyers that are profitable

Marketing Management Marketing 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.

Marketing Management Selecting customers to serve

Dividing the market into segments of customers- Market segmentation

Selecting which segments it will go after- Target marketing Demarketing

Value proposition Set of benefits or values it promises to deliver

to customers to satisfy their needs.

Value Proposition

iPhone

Nokia

Nokia

Marketing Management Orientations

Production concept Product concept

Selling concept Marketing concept

□ Societal marketing concept

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

The Production Concept Assumes that consumers are interested

primarily in product availability at low prices

Marketing objectives: Cheap, efficient production Intensive distribution Market expansion

The Product Concept Assumes that consumers will buy the

product that offers them the highest quality, the best performance, and the most features

Marketing objectives: Quality improvement Addition of features

Marketing Myopia

A focus on the existing product only rather than the consumer needs it presumes to satisfy

Management’s failure to recognize the scope of the business

Product-oriented rather than customer-oriented management endangers future growth

Avoiding Marketing Myopia by focusing on benefitsCompany Myopic

DescriptionMarketing oriented description

Cingular “We are a telephone company”

“We are a communications company”

JetBlue Airways “We are in the airline business”

“We are in the transportation business”

Sony “We are in the video game business”

We are in the entertainment Business

The Selling Concept Assumes that consumers are unlikely to

buy a product unless they are aggressively persuaded to do so

Marketing objectives: Sell, sell, sell

Lack of concern for customer needs and satisfaction

The Marketing Concept Assumes that to be successful, a company

must determine the needs and wants of specific target markets and deliver the desired satisfactions better than the competition

Marketing objectives: Profits through customer satisfaction

Societal Marketing Concept

Societal Marketing

ConceptCompany(Profits)

Consumers(Want

Satisfaction)

Society(Human Welfare)

• Assumes that marketing strategy should deliver value to customers in a way that maintain and improves both the consumer’s and society’s well-being

The Marketing Plan Transforms the marketing strategy into

action Includes the marketing mix -The 4P’s of

marketing Product Price Place Promotion

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

Marketing mixes- 4P’s Product

Firm must first create a need satisfying market offering

Price Decide how much it will charge for the offer

Place Decide how it will make the offer available to

target consumers Promotion

Communicate with target customers about the offer and persuade them of its merit

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

Building Customer Relationships

CRM–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