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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. 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.

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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.
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What is Marketing Management?

Marketing management is the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value.
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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
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Designing the Right Product

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Only the best is good enough for Lexus customers

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Key Customer Markets

Consumer Markets Global Markets

Business Markets

Nonprofit/ Government Markets

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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.

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A Simple Model of the Marketing Process

Create value for customers and build customer relationships

Understand the marketplace and customer needs and wants

Design a customerdriven marketing strategy

Construct a marketing program that delivers superior value

Capture value from customers in return

Build profitable relationships and create customer delight

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Capture value from customers to create profits and customer equity

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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.

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Needs - state of felt deprivation including physical, social, and individual needs. Types of Needs
Physical: Social:
Food, clothing, shelter, safety Belonging, affection Learning, knowledge, self-expression

Individual:

Wants - form that a human need takes, as shaped by culture and individual personality.
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I want it, I need it

5 Types of Needs

Stated needs Real needs Unstated needs Delight needs Secret needs

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What is Marketed?
Goods Services Events & Experiences Persons Places & Properties Organizations Information Ideas
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Marketing Goods

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Marketing Ideas: Friends Dont Let Friends Drive Drunk This is the watch Stephen Hollingshead, Jr. was wearing when he encountered a drunk driver. Time of death 6:55 p.m.
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What Satisfies Consumers Needs and Wants?

Anything that can be Offered to a Market to Satisfy a Need or Want

Products

Persons

Places

Organizations

Information

Ideas

Activity or Benefit Offered for Sale That is Essentially Intangible and Does Not Result in the Ownership of Anything
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Services

Product as an Idea
Products do not have to be physical objects. Here the product is an ideaprotecting animals.

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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.

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Value and Satisfaction

Expectation
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Performance
10

Expectation
10

Performance
8

If performance is lower than expectations, satisfaction is low. If performance is higher than expectations, satisfaction is high.
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A Simple Marketing System

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Elements of a Modern Marketing System

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Structure of Flows in a Modern Exchange Economy

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Marketing Management
The art and science of choosing target
markets and building profitable relationships with them.

Questions to ask: 1. What customers will we serve?

What is our target market?

2. How can we best serve these customers?

What is our value proposition?
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Segmentation and Target Marketing

#1
Market Segmentation:
Divide the market into segments of customers

#2

Target Marketing:
Select the segment to cultivate
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Marketing Management
Demand Management
Finding and increasing demand, also changing or reducing demand, such as in demarketing.

Demarketing

Temporarily or permanently reducing the number of customers or shifting their demand.

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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.

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Marketing Management Philosophies

Societal Marketing Concept

Marketing Concept
Selling Concept Product Concept Production Concept
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Marketing and Sales Concepts Contrasted

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Societal Marketing Concept

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Corporate Social Initiatives

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Corporate Social Initiatives

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Holistic Marketing Dimensions

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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.

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The Marketing Mix

Product
Price Customer Needs Promotion

Distribution

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Marketing-Mix Strategy

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Marketing Mix and the Customer

Four Ps Product Price Place Promotion Four Cs Customer solution Customer cost Convenience Communication

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Factors Influencing Marketing Strategy

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Marketing Management Tasks

Developing marketing
strategies Capturing marketing insights Connecting with customers Building strong brands

Shaping market

offerings Delivering value Communicating value Creating long-term growth

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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.

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Customer Relationship Management

The process of building and maintaining

profitable customer relationships by delivering superior customer value and satisfaction.

Customer Perceived Value

Customers evaluation of the difference
between all the benefits and all the costs of a marketing offer relative to those of competing offers.
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Customer Relationship Levels

Basic Relationship

Continuum

Full Partnership

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Loyalty and Retention

Financial Benefits Social Benefits

Structural Ties

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Partner Relationship Marketing

Partners Inside the Firm
1. All employees customer focused 2. Teams coordinate efforts toward customers

Partners Outside the Firm

1. Supply chain management 2. Strategic alliances

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Customer Loyalty & Retention

Customer Lifetime Value Share of Customer
The entire stream of purchases that the customer would make over a lifetime of patronage. The share a company gets of the customers purchasing in their product categories.

Customer Equity
Customer equity is the total combined
customer lifetime values of all the companys customers.

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Customer Relationship Groups

Butterflies
High Good fit between companys offerings and customers needs; high profit potential

True Friends
Good fit between companys offerings and customers needs; highest profit potential

Profitability

Strangers
Low Little fit between companys offerings and customers needs; lowest profit potential Short-term customers

Barnacles
Limited fit between companys offerings and customers needs; low profit potential Long-term customers
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Projected loyalty
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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.

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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.
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New Marketing Landscape

Rapid Globalization

Not-for-Profit Marketing

Ethics & Social Responsibility

New World of Marketing Relationships

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Global Markets

Coke is represented at the first China International Beverage Festival in Beijing in 2003

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The marketplace isnt what it used to be

Changing technology Globalization Deregulation Privatization Empowerment Customization Convergence Disintermediation
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Core Concepts
Needs, wants, and
Marketing channels Supply chain Competition Marketing environment Marketing planning

demands Target markets, positioning, segmentation Offerings and brands Value and satisfaction

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Rest Stop: Reviewing the Concepts

1. Define marketing and outline the steps in the

2.
3. 4. 5.

marketing process. Explain the importance of understanding customers and the marketplace, and identify the five core marketplace concepts. Identify the key elements of a customer-driven marketing strategy and discuss marketing management orientations that guide marketing strategy. Discuss customer relationship management and strategies for building lasting customer relationships. Describe the major trends and forces that are changing the marketing landscape in this new age of relationships.
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