Marketing: Managing Profitable Customer Relationships

1. Marketing: Managing Profitable Customer Relationships Chapter 1

2. Learning Goals • Define marketing and the marketing process. • Explain the importance of understanding customers and identify the five core marketplace concepts • Identify the elements of a customer-driven marketing strategy and discuss the marketing management orientations. • Discuss customer relationship management

3. 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.

4. The Marketing Process Create value for customers and build customer relationships Capture value from customers in return Capture value from customers to create profits and customer quality Understand the marketplace and customer needs and wants Construct a marketing program that delivers superior value Build profitable relationships and create customer delight Design a Customer-driven marketing strategy Goal 1: Define marketing and the marketing process.

5. Understanding the Marketplace and customer needs 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

6. Understanding the Marketplace and customer needs • Marketing offers: • Products • Services • Events • Experiences • Persons • Places • Ideas • Organizations • Information

7. 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

8. 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

9. 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.

10. 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.

11. Value Proposition iPhone Nokia Nokia

12. Production concept Product concept Selling concept Marketing concept Marketing Management Orientations • Societal marketing concept Goal 3: Identify elements of a customer-driven strategy.

13. The Production Concept • Assumes that consumers are interested primarily in product availability at low prices • Marketing objectives: • Cheap, efficient production • Intensive distribution • Market expansion

14. 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

15. 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

16. Avoiding Marketing Myopia by focusing on benefits

17. 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

18. 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

19. Societal Marketing Concept • 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 Society (Human Welfare) Societal Marketing Concept Consumers (Want Satisfaction) Company (Profits)

20. 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.

21. 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.

22. 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