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Marketing: Managing Profitable Customer Relationships

1. Marketing: Managing Profitable Customer Relationships. ROAD MAP: Previewing the Concepts. What is marketing? Key steps in the marketing process. Consumers’ needs and wants. Five core marketplace concepts. Key elements of a customer-driven marketing strategy.

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Marketing: Managing Profitable Customer Relationships

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  1. 1 Marketing: Managing Profitable Customer Relationships

  2. ROAD MAP: Previewing the Concepts • What is marketing? • Key steps in the marketing process. • Consumers’ needs and wants. • Five core marketplace concepts. • Key elements of a customer-driven marketing strategy. • Marketing management orientations that guide marketing strategy. • Customer relationship management and strategies. • Major trends and forces that are changing the marketing landscape in this new age of relationships. Professor Takada

  3. What is Marketing? Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders. Professor Takada

  4. What is Marketing Management? Marketingmanagement is the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value. Professor Takada

  5. Selling is only the tip of the iceberg “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. All that should be needed is to make the product or service available.” Peter Drucker Professor Takada

  6. Designing the “Right” Product Professor Takada

  7. Only the best is good enough for Lexus customers Professor Takada

  8. Consumer Markets Global Markets Business Markets Key Customer Markets Nonprofit/ Government Markets Professor Takada

  9. ROAD MAP: • What is marketing? • Key steps in the marketing process. • Consumers’ needs, wants, and demands. • Five core marketplace concepts. • Key elements of a customer-driven marketing strategy. • Marketing management orientations that guide marketing strategy. • Customer relationship management and strategies. • Major trends and forces that are changing the marketing landscape in this new age of relationships. Professor Takada

  10. Construct a marketing program that delivers superior value Understand the marketplace and customer needs and wants Design a customer-driven marketing strategy Build profitable relationships and create customer delight Capture value from customers to create profits and customer equity A Simple Model of the Marketing Process Create value for customers and build customer relationships Capture value from customers in return Professor Takada

  11. ROAD MAP: Previewing the Concepts • What is marketing? • Key steps in the marketing process. • Consumers’ needs, wants, and demands. • Five core marketplace concepts. • Key elements of a customer-driven marketing strategy. • Marketing management orientations that guide marketing strategy. • Customer relationship management and strategies. • Major trends and forces that are changing the marketing landscape in this new age of relationships. Professor Takada

  12. Types of Needs Needs - state of felt deprivation including physical, social, and individual needs. • Physical: • Food, clothing, shelter, safety • Social: • Belonging, affection • Individual: • Learning, knowledge, self-expression Wants - form that a human need takes, as shaped by culture and individual personality. Professor Takada

  13. I want it, I need it… 5 Types of Needs • Stated needs • Real needs • Unstated needs • Delight needs • Secret needs Professor Takada

  14. Goods Services Events & Experiences Persons Places & Properties Organizations Information Ideas What is Marketed? Professor Takada

  15. Marketing Goods Professor Takada

  16. Marketing Ideas:Friends Don’t Let Friends Drive DrunkThis is the watch Stephen Hollingshead, Jr. was wearing when he encountered a drunk driver. Time of death 6:55 p.m. Professor Takada

  17. What Satisfies Consumers’ Needs and Wants? Products Anything that can be Offered to a Market to Satisfy a Need or Want Persons Places Organizations Information Ideas Services Activity or Benefit Offered for Sale That is Essentially Intangible and Does Not Result in the Ownership of Anything Professor Takada

  18. Product as an Idea Products do not have to be physical objects. Here the “product” is an idea—protecting animals. Professor Takada

  19. Marketing Myopia • Sellers pay more attention to the specific products they offer than to the benefits and experiences produced by the products. • They focus on the “wants” and lose sight of the “needs.” Professor Takada

  20. Performance Expectation Performance Expectation 8 10 10 8 Value and Satisfaction If performance is lower than expectations, satisfaction is low. If performance is higher than expectations, satisfaction is high. Professor Takada

  21. A Simple Marketing System Professor Takada

  22. Elements of a Modern Marketing System Professor Takada

  23. Structure of Flows in a Modern Exchange Economy Professor Takada

  24. Marketing Management • The art and science of choosing target markets and building profitable relationships with them. Questions to ask: • What customers will we serve? What is our target market? • How can we best serve these customers? What is our value proposition? Professor Takada

  25. Market Segmentation: Divide the market into segments of customers Target Marketing: Select the segment to cultivate Segmentation and Target Marketing #1 #2 Professor Takada

  26. Demarketing Temporarily or permanently reducing the number of customers or shifting their demand. Marketing Management Demand Management Finding and increasing demand, also changing or reducing demand, such as in demarketing. Professor Takada

  27. ROAD MAP: • What is marketing? • Key steps in the marketing process. • Consumers’ needs and wants. • Five core marketplace concepts. • Key elements of a customer-driven marketing strategy. • Marketing management orientations that guide marketing strategy. • Customer relationship management and strategies. • Major trends and forces that are changing the marketing landscape in this new age of relationships. Professor Takada

  28. Marketing Management Philosophies Customer-Driven Societal Marketing Concept Marketing Concept Selling Concept Product Concept Production Concept Professor Takada

  29. Marketing and Sales Concepts Contrasted Professor Takada

  30. Societal Marketing Concept Professor Takada

  31. Corporate Social Initiatives Professor Takada

  32. Corporate Social Initiatives Professor Takada

  33. Holistic Marketing Dimensions Professor Takada

  34. ROAD MAP: • What is marketing? • Key steps in the marketing process. • Consumers’ needs and wants. • Five core marketplace concepts. • Key elements of a customer-driven marketing strategy. • Marketing management orientations that guide marketing strategy. • Customer relationship management and strategies. • Major trends and forces that are changing the marketing landscape in this new age of relationships. Professor Takada

  35. Product Price Customer Needs Promotion Distribution The Marketing Mix Professor Takada

  36. Marketing-Mix Strategy Professor Takada

  37. Four P’s Product Price Place Promotion Four C’s Customer solution Customer cost Convenience Communication Marketing Mix and the Customer Professor Takada

  38. Factors Influencing Marketing Strategy Professor Takada

  39. Developing marketing strategies Capturing marketing insights Connecting with customers Building strong brands Shaping market offerings Delivering value Communicating value Creating long-term growth Marketing Management Tasks Professor Takada

  40. ROAD MAP: • What is marketing? • Key steps in the marketing process. • Consumers’ needs and wants. • Five core marketplace concepts. • Key elements of a customer-driven marketing strategy. • Marketing management orientations that guide marketing strategy. • Customer relationship management and strategies. • Major trends and forces that are changing the marketing landscape in this new age of relationships. Professor Takada

  41. Customer Relationship Management • The process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. Customer Perceived Value • Customer’s evaluation of the difference between all the benefits and all the costs of a marketing offer relative to those of competing offers. Professor Takada

  42. Customer Relationship Levels Full Partnership Continuum Basic Relationship Professor Takada

  43. Financial Benefits Social Benefits Structural Ties Loyalty and Retention Focus on Profitable Customers Professor Takada

  44. Partners Inside the Firm • All employees customer focused • Teams coordinate efforts toward customers Partner Relationship Marketing • Partners Outside the Firm • Supply chain management • Strategic alliances Professor Takada

  45. Customer Lifetime Value The entire stream of purchases that the customer would make over a lifetime of patronage. Share of Customer The share a company gets of the customers purchasing in their product categories. Customer Loyalty & Retention Customer Equity • Customer equity is the total combined customer lifetime values of all the company’s customers. Professor Takada

  46. Customer Relationship Groups Butterflies True Friends Good fit between company’s offerings and customer’s needs; high profit potential Good fit between company’s offerings and customer’s needs; highest profit potential High Profitability Strangers Barnacles Little fit between company’s offerings and customer’s needs; lowest profit potential Limited fit between company’s offerings and customer’s needs; low profit potential Low Long-term customers Short-term customers Projected loyalty Professor Takada

  47. ROAD MAP: • What is marketing? • Key steps in the marketing process. • Consumers’ needs and wants. • Five core marketplace concepts. • Key elements of a customer-driven marketing strategy. • Marketing management orientations that guide marketing strategy. • Customer relationship management and strategies. • Major trends and forces that are changing the marketing landscape in this new age of relationships. Professor Takada

  48. The Internet • The Internet has been hailed as the technology behind a New Economy. • Marketing applications include: • “Click-and-mortar” companies • “Click-only” companies • Business-to-business e-commerce • Business-to-business transactions online are expected to reach $4.3 trillion in 2005. • By 2005, 500,000 companies will use the Internet to do business. Professor Takada

  49. New Marketing Landscape Rapid Globalization Not-for-Profit Marketing Ethics & Social Responsibility New World of Marketing Relationships Professor Takada

  50. Global Markets Coke is represented at the first China International Beverage Festival in Beijing in 2003 Professor Takada

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