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Announcements

• Please turn in your student information forms
• Registration on the research website
  (www.experimetrix.com/cox)
• Class slides will be available at
  http//prajagopal.cox.smu.edu

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Managing Customer Relationships

• 01/26/09

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What is marketing?

• Advertising?

• Selling?

• Sales Promotion?

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Definition of 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 (American
  Marketing Association - 2004)

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Organization and its stakeholders
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What is marketing?

• Marketing is the delivery of customer value and
  satisfaction at a profit.
• Attract new customers by promising superior
  value.
• Keep current customers by delivering
  satisfaction.

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Value

• Value Benefits/Costs
• Benefits Functional benefits Emotional
  benefits
• As product features become standardized,
  emotional benefits differentiate brands and
  deliver value
• Costs Monetary Time Energy
• Lowering price is often not feasible, so focus is
  on lowering time and energy costs

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Value

• Value can be increased through
• Lowering costs
• Increasing benefits
• Combination of both
• Increasing value increases customer satisfaction

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Customer satisfaction

• Satisfaction Meeting or exceeding customer
  expectations
• Satisfied customers ? Repeat customers ? Loyal
  customers
• A 5 reduction in the customer defection rate can
  increase profits by 25-85
• New customers cost 5 times as much as current
  customers
• An average company loses 10 of its customers
  annually
• Focusing on loyalty leads to a focus on customer
  relationships, not customer transactions

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Goals of Marketing

• Discover the needs and wants of prospective
  customers.
• Satisfy these needs and wants at a profit.

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Basic Marketing System
Communication
Goods/services
Market (a collection of buyers)
Industry (a collection of sellers)
Money
Information
Marketing is an exchange process
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Requirements for Marketing to Occur

• Two or more parties with unsatisfied needs
• Desire and ability to satisfy those needs
• A way for the parties to communicate
• Something to exchange

XYZ. Inc. launches a new magazine targeting
southern college students
Jack is a recent marketing graduate, earning
40,000 a year. He dreams of owning a
Lamboghirini.
You purchase your text book at the SMU bookstore.
You pay cash and the store sells you the book.
You want to buy a candy bar from a store. The
store does not stock the brand that you want.
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The Evolution of Marketing
Production Era
Sellers Market
Scarcity of goods
(Production orientation) focus on production
Mid 1800s 1920s
Technological development
Product Era
(Product orientation) focus on product
1920s 1960s
Increased competition
Sales Era
(Sales orientation) focus on sales
1960s 1990s
Buyers Market
Marketing Era
1990s till date
(Marketing orientation) focus on
targeted customers wants
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The Evolution of Marketing
Production Era
They can have any color they want as long as it
is black - Henry Ford
Were a classic MBA case study in how not to
introduce a product. First we created a marvelous
technological achievement. Then we asked how to
make money on it. Iridium Interim CEO John A.
Richardson
Product Era
We need to hire more salespersons to sell the
flour just as we hire accountants to keep our
books. Pillsbury
Sales Era
I do not consider a sale complete until goods are
worn out and the customer still satisfied. We
will thank anyone to return goods that are not
perfectly satisfactory...Above all things we wish
to avoid having a dissatisfied customer LL Bean
Marketing Era
Have it your way Burger King
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Marketing concept

• Assess and satisfy consumer wants and needs more
  effectively and efficiently than competitors
  while also trying to achieve the organizations
  objectives.
• Market orientation
• Collect information on customers
• Share information across departments
• Use information to create and improve customer
  value

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Societal marketing concept

• Marketing concept promote social welfare
• Examples
• Ben Jerrys ice cream
• Starbucks coffee

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Implications of Shift in Orientation
Products Processes
Customers Competitors
Inward
Move to Outward Focus

• Focus on more than just one transaction
• (relationship marketing, CRM, lifetime value)
• Focus on consumer research
• Focus on competitive advantage
• (hygiene vs. differentiating features or
  points-of-difference)
• Focus on BENEFITS to your customers delivered
  through product features.

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Marketing strategy overview - basic structure
Company (strengths weaknesses)
Customers
Competition
Product
Price
Promotion
Place
Leveraging real tools to implement strategic
objectives
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Marketing Analysis the 3 Cs

• Company Analysis
• Company philosophy and mission
• Competencies
• Profitability
• Competitor Analysis
• Who are current and future competitors?
• What is their strategy?
• How will they respond to our actions?
• Customer Analysis
• Who buys what and how much (now and in future)?
• When and where?
• How do they get information?
• What do they want?
• What do they know beliefs?
• Benefits
• Segments

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Formulating Market Strategy the 4 Ps

• Product
• Product line
• Product design and packaging
• Branding
• Promotion
• Advertising versus sales promotion
• Consumer versus trade promotion
• Media selection and scheduling
• Creative strategy

• Price
• Price setting and communication
• Price discrimination
• Skimming versus penetration
• Place (distribution channel)
• Channel length and breadth
• Manufacturer's reps or own salesforce
• Power and conflict in channels

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Course Framework
Product Pricing Place/channel Promotion