bcr slide (chapter 1-3)

BUILDING CUSTOMER RELATIONSHIPSBM006-3-3CHAPTER 1,2 & 3THE EVOLUTION OF MARKETING STRATEGIES

Module Code and Module TitleTitle of Slides

LEARNING OUTCOMETHE TRADITIONAL ORGANIZATIONAL-DRIVEN STRATEGIES

THE MODERN CUSTOMER-FOCUS STRATEGIES

THE EVOLUTION OF MARKETING SHIFT FROM TRADITIONAL ORGANIZATIONAL-DRIVEN STRATEGIES TO MODERN CUSTOMER-FOCUS STRATEGIES


Marketing defined as...Process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others. Simply put: Marketing the delivery of customer satisfaction at a profit.


More Definitions of MarketingA social and managerial process by which individuals and groups obtain what they need and want through creating, offering and exchanging products and services of value with others.

The management process responsible for identifying, anticipating and satisfying customer requirements profitably.

Marketing consists of individual and organizational activities that facilitate and enhance satisfying exchange relationships in a dynamic environment through the creation, servicing, distribution, promotion and pricing of goods, services and ideas


More Definitions of Marketing (cont.)From the societal perspective; some marketers describe marketing as the creation and delivery of a standard of living.

From the managerial perspective; marketing (management) is the process of planning and executing the conception, pricing, promotion and distribution of goods and services to create exchanges that satisfy individual and organizational goals.


What is Marketing?No single correct definition or approach Common subject matters:The ability to satisfy customers,The identification of favorable marketing opportunities,The need to create an edge over competitors,The capacity to make profits to enable a viable future for the organization,The use of resources to maximize a business market position,The aim to increase market share mainly in target markets


Marketing ProcessBuild profitable relationships and create customer delightCapture value from customers to create profits and customer quality

Create value for customers and build customer relationshipsCapture value from customers in returnDesign a customer-driven marketing strategy Construct a marketing program that delivers superior valueUnderstand the marketplace and customer needs&wants


Core Concepts of MarketingNeeds, wants, and demandsProductsand servicesValue and satisfactionExchange, transactions, and relationshipsMarkets


Core Concepts of MarketingNeeds, wants, and demandsMarketing offers: including products, services and experiencesValue and satisfaction Exchange, transactions and relationships Markets

NeedBasic human requirements State of felt deprivationExample: Need foodWantsNeeds directed to specific objects The form of needs as shaped by culture and the individualExample: Want a Big MacDemandsWants which are backed by buying power



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


ProductsAnything that can be Offered to a Market to Satisfy a Need or WantCore Concepts of MarketingServicesActivities or Benefits Offered for Sale That Are EssentiallyIntangible and Dont Result in the Ownership of Anything



ValueCustomers form expectations regarding valueMarketers must deliver value to consumersSatisfactionA satisfied customer will buy again and tell others about their good experience


Core Concepts of Marketing



ExchangeThe act of obtaining a desired object from someone by offering something in returnTransaction Trade of values between two or more partiesOne exchange is not the goal, relationships with several exchanges are the goal

Relationships are built through delivering value and satisfactionMarketing network consists of the company and all its supporting stakeholders


Evolution of Marketing Thought How marketing has become marketing as we understand it and apply its practices today?


Evolution of Marketing ThoughtProduction Era (1850s-1920s) Industrial revolution; mass productionFew products and little competitionSales Era (1920s-1950s)The focus was on personal selling and advertisingSales seen as the major means for increasing profitsMktg Era (1950s-present)Customer orientation replaced the hard sell of the sales-led eraDetermination of the needs and wants of customers before introducing products or services


Evolution of Marketing ThoughtRelationship Marketing Era: 1990s-Marketing era has recently shifted from being transaction-based to focusing on relationshipsThe argument traditional marketing practices focused on attracting new customers rather than retaining existing ones.It is equally important to hang on to existing customers so that they become repeat buyers and long term loyal customerscustomer relationship management!


Evolution of the Marketing Concept


Production Concept

Product ConceptSelling ConceptMarketing ConceptConsumers prefer products that are widely available and inexpensive

Consumers favor products thatoffer the most quality, performance,or innovative featuresConsumers will buy products only ifthe company aggressivelypromotes/sells these productsFocuses on needs/ wants of target markets & delivering value better than competitorsCompany Orientations Towards the Marketplace


Production ConceptConsumers will favor those products that are widely available and low in cost.Managers concentrate on achieving high production efficiency and wide distribution.

The assumption is valid at least in 2 situations :The demand for a product exceeds supply (suppliers will concentrate on finding ways to increase production)The products cost is high and has to be decreased to expand the market.


Product Concept

Consumers will favor those products that offer the most quality, performance or innovative features. Managers in product-oriented organizations concentrate on making superior products and improving them over time.The assumption the customers will admire well-made products and can evaluate product quality and performance This concept may lead to marketing myopia (intolerance, short-sightedness)


Selling ConceptAgressive selling and promotion Assumptions are; Consumers must be convinced of buying company productsCompany is powerful in generating effective selling and promotion to stimulate more buyingThis concept is mostly used by firms which have overcapacity. The aim is to sell what they make rather than make what the market wants. Short-term profits are more important (customer dissatisfaction may occur)


Marketing ConceptKey to achieving organizational goals consists of being more effective than competitors in creating, delivering and communicating customer value to target markets.

4 pillars of modern marketing :Target marketCustomer needsIntegrated marketingProfitability through customer satisfaction


Marketing and Sales Concepts Contrasted


Marketing Concept (cont.)Target market homogenous group of customers to whom the company wishes to appealCustomer needsConsumers may not be fully conscious of their needsIt may not be easy to articulate these needsThey may use words that require some interpretation Customer-oriented thinking to define customer needs from the customers point of viewSales revenue New customers + Repeat customers Customer Retention vs. Customer Attraction Customer satisfaction is a function of the product perceived performance and buyers expectations


Marketing Concept (cont.)Integrated MarketingVarious marketing functions must work together for customer satisfaction (coordination of 4Ps; marketing mix elements)Marketing Mix controllable variables the company puts together to satisfy its target market(s). Product: Product variety, quality, design, features, brand name, packaging, sizes, services, warranties, returnsPrice: List price, discounts, allowances, payment period, credit termsPromotion: Sales promotion, advertising, sales force, public relations, direct marketingPlace: Channels, coverage, assortments, locations, inventory, transport


Professor TakadaSocietal Marketing Concept

Professor Takada


Marketing Concept (cont.)Integrated Marketing (cont.)Marketing must be well coordinated with other departments in the company;all departments have to work together to satisfy customers needs and wants

Profitability through customer satisfaction To achieve profits as a result of creating superior customer value


Selling Marketing...There will always be need for some selling. But the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy. Peter Drucker


CustomersFront-line peopleMiddle Management

TopManagementModern Marketing Concept Traditional Organization Chart


Modern Marketing Concept Customer-Oriented Organization Chart


INTANGIBLES

Brand capitalHuman capitalWorking capitalPhysical capitalSales push focus Customer pull focusProduction focus Customer focusHigh Low(WIP, finished goods) (direct delivery to customers)


Marketing LandscapeGrowth of the InternetAdvances in telecommunications, information, transportationCustomer research and trackingProduct developmentDistributionNew advertising tools24/7 marketing through the Internet

ChallengesDigital ageGlobalizationEthics and social responsibilityNot-for-profit marketingMarketing relationships


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

Challenges


Marketing LandscapeDigital ageGlobalizationEthics and social responsibilityNot-for-profit marketingMarketing relationshipsMarketers need to take great responsibility for the impact of their actionsChallenges


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

Challenges


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


10-*The Shift from Transaction-Based Marketing to Relationship Marketing Transaction-based marketingBuyer and Seller exchanges characterized by limited communications and little or no ongoing relationship between the partiesRelationship marketingDevelopment and maintenance of long-term, cost-effective relationships with individual customers, suppliers, employees, and other partners for mutual benefit


10-*Customer relationship managementThe combination of strategies and tools that drive relationship programs, re-orientating the entire organization to a concentrated focus on satisfying customers


10-*Figure 10.1Forms of Buyer-Seller Interactions on a Continuum from Conflict to Cooperation


10-*Table 10.1Comparing Transaction-Based Marketing and Relationship Marketing Strategies


10-*Enhancing Customer SatisfactionThree Steps to Measure Customer Satisfaction


Relationship marketing - developing and maintaining long-term, cost-effective exchange relationships with partners.Consumers enter into relationships only if there is some benefit to them.Relationship Marketing


Lower costs and higher profits for the business.Efficient targeting of best customers increases the lifetime value of a customer.Stronger relationships with business partners and opportunities to combine capabilities and resources to better accomplish goals.Benefits of Relationship Marketing


80/20 principle: Frequent customers have a higher lifetime value, so businesses allocate resources accordingly.Frequency marketing: reward purchasers with cash, rebates, and other premiums.Affinity programs: solicit involvement based on common interest.Comarketing: businesses jointly market each others products.Cobranding: firms link their names in a single product.Tools for Nurturing Customer Relationships


10-*Building Buyer-Seller RelationshipsMany customers are seeking ways to simplify their lives, and relationships provide a way to do thisCustomers find comfort with brands that have become familiar through their ongoing relationships with companiesSuch relationships often lead to more efficient decision-making my customers and higher levels of customer satisfaction


10-*How Marketers Keep CustomersRetaining customers as far more profitable than losing themCustomers typically generate more profits for firm with each additional year of the relationshipIt has been noted that a 5 percent gain in customer retention can lead to an 80 percent increase in profitsFrequency marketing (Promotional program aimed at encouraging repeat sales by rewarding customers on buy frequently or on regular basis)Affinity marketing (selling goods and services by creating partnerships with similar or compatible companies and brands)


10-*Customer Relationship ManagementThe combination of strategies and tools that drive relationship programs, reorientating the entire organization to a concentrated focus on satisfying customers

Managing Virtual Relationships

Retrieving Lost Customers


10-*Buyer-Seller Relationships in Business-to-Business MarketsBusiness-to-business marketing involves an organizations purchase of goods and services to support company operations or the production of other productsBuyer-seller relationships between companies involve working together to provide advantages that benefit both partiesAdvantages might include the lower prices, quicker delivery, improved quality and reliability, customized product features, and more favorable financing terms


Traditional vs. MarketingWith the cost of customer attraction escalating, companies are paying more attention to holding on to their existing customers Long-standing customers are less expensive to reach and less expensive to serve Customer relationships are assets that should be evaluated and managed as rigorously as any financial or physical assetsRelationship marketing not only focuses on customer retention, but also takes a long-term perspective



Relationship Marketing Defined

To establish, maintain, and enhance (usually but not necessarily long-term) relationships with customers and other partners, at a profit, so that the objectives of the parties involved are met. This is achieved by a mutual exchange and fulfillment of promises.

___Grnroos (Service Management and Marketing, 1990)


Relationship Marketing - Goals and Outcomes Whereas the goal of traditional marketing is customer acquisition, under relationship marketing the focus shifts to creating value The objective is to create more value through interdependent, collaborative relationships with customers, the outcome is customer retention Relationship marketing is ongoing, constantly looking for opportunities to generate new valueRetaining customers requires marketers to exhibit care and concern after they have made a purchaseThe sale often represents only the beginning of the relationship between the buyer and seller


Building Lasting Customer RelationshipsSellers can resist the natural tendency toward decline and complacency by developing what we refer to as relationship enablersIt is the sellers responsibility to nurture the relationship beyond its simple dollar valueUsing the relationship enablers sellers can minimize relationship decay and strengthen the bonds that lead to long-term, perhaps even lifetime associations


QUESTIONS

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