Marketing Principles Session 1

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Marketing Principles Session 1
Managing Profitable Customer Relationships
Jeffrey E. Newcomb Red Widget Strategies for
Hosei University
Marketing Principles is accompanied by the
text Gary Armstrong Philip Kotler, Marketing
An Introduction 8e
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About your instructor,Jeff Newcomb.

• Principal, Red Widget Strategies
• Marketing management consulting
• Professional background
• Media and communications
• Teaching experience
• Marketing business subjects for 14 years
• Special interests
• Strategy, innovation, services, research
• Lives in Walnut Creek, California USA

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Looking ForwardWhere are we going?
Session 1, Managing Profitable Customer
Relationships, will help you to

• Define marketing
• Outline the marketing process
• Explain the importance of customers and the
  marketplace
• Identify the parts of a customer-driven
  marketing strategy

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Looking Forward.

• Discuss the marketing management orientations
  that guide marketing strategy
• Discuss strategies for building customer
  relationships
• Describe the major trends and forces now
  changing the marketing landscape

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So. What is Marketing?

• Marketing is a managerial and societal process
  by which individuals and groups obtain what they
  need and want through creating, offering, and
  freely exchanging products and services of value
  with others.
• -- Philip Kotler

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What is Marketing?
More perspectives on marketing

• Marketing is one-third science, one-third art and
  one-third luck.
• Marketings purpose is to find and keep
  customers.
• Marketing means creating and sustaining value in
  relationships with customers and doing so
  better than competitors.
• Marketing is the process by which companies
  create value for customers and build strong
  customer relationships in order to capture value
  from customers in return. Armstrong Kotler

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The Marketing Process A simple model
Create value for customers and build customer
relationships
Construct a marketing program that delivers
superior value
Understand the marketplace and customer needs and
wants
Design a customer-driven marketing strategy
Capture value from customers in return
Build profitable relationships and
create customer delight
Create profits and customer equity
Source Armstrong Kotler
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Needs, Wants, Demands
Need A felt deprivation. We as humans are
motivated to fulfill or satisfy needs. Needs
include physical, social, and individual types

• Want Form that a human need takes, as shaped by
  culture and individual personality
• Need Wants Buying Power Demand

What are two examples of needs -- and two
examples of wants?
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Needs and WantsExamples

• Needs
• Physical
• Food, shelter
• Social
• Belonging, affection
• Individual
• Learning, knowledge, self-expression

• Wants
• A tasty dessert at your favorite restaurant
• Your dream house .
• a magnificent, secluded estate by the ocean

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Satisfying Needs and Wants

• Needs and wants can be satisfied through a
  marketing offer
• A combination of products, services, information,
  or experiences offered to a market to satisfy a
  need or want.

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Practice Naive Listening

• Being a good listener
• good marketing!
• Focus your attention on what is being said
• Keep an open mind
• Write essential points of conversation
• Ask questions to help your understanding
• Avoid distractions during a conversation
• Avoid early judgment about the speaker,
• or what is being said

What could you do to practice naïve
listening? How can naïve listening help you?
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What is a Market?

• The set of actual and potential buyers
• of a product or service.
• Actual and potential buyers share a need or want
  that can be satisfied through exchange of
  products and services of value.

Provide 3 examples of different markets you know.
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Market Examples

• Originally, market was a place in
• a village or town where buyers and sellers
• met to exchange goods and services
• Markets today are defined by buyers interested in
  a category of products or services. Examples the
  housing market the sports car market the market
  for portable music.
• Markets can also be defined by the common
  characteristics of buyers. Examples the teen
  market the seniors market the hobbyist market.

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Value Proposition

• The set of benefits or values an organization
  promises to deliver to the customer, to satisfy
  unmet needs.
• The Value Proposition helps us answer the key
  questions
• 1. What customers will we serve?
• 2. How can we best serve these customers?

It cleans and freshens like sunshine!
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Original Value Proposition from Amazon.com

• For people everywhere who love to read books,
  Amazon.com is an online bookseller which provides
  exceptional customer service, across-the-board
  discounted pricing, 24/7 order convenience and
  selection from three million titles.

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Marketing Management Orientations Towards the
Marketplace
Production Concept
Consumers prefer products that are widely
available and inexpensive
Product Concept

• Consumers favor products that offer the most
  quality, performance, or innovative features

Selling Concept
Consumers will buy products only if the company
aggressively promotes/sells these products
Marketing Concept
Focuses on needs/ wants of target markets
delivering value better than competitors
Societal Marketing Concept
Marketing strategy should deliver customer value
while considering the well-being of society
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Relationship Marketing

• Partners inside the firm
• All employees are customer-focused
• Teams coordinate customer efforts
• Partners outside the firm
• Managing relationships with suppliers the
  organizations supply chain
• Managing relationships with the organizations
  strategic alliances

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Explore the Value of Relationship Marketing with
Customers
Take a walk in your customers shoes .
What can you learn from your own experience?
Imagine what it might be like to be your
customer!
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Customer Relationship Management (CRM)

• The process of building and maintaining
  profitable customer relationships by delivering
  superior customer value and satisfaction.

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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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My Tilley Hat
An example of high perceived value
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Customer Satisfaction
Depends on performance by the producer, as
perceived by the customer, measured by the
customers expectations.
Satisfied Customers.

• Buy more (services, products upgrades)
• Give positive word-of-mouth promotion to
  potential new customers
• Show greater brand loyalty
• Are less sensitive to higher prices
• Offer feedback to the producer
• Reduce transaction costs for producer
• Source PIMS Database
• (Profit Impact of Market
  Strategy)

We deliver good service!
Describe a recent experience in which you have
been satisfied as a customer. How did the
experience make you feel?
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Possible Customer Experiences

• Of course, our experiences as a customer can vary
  widely depending upon circumstances.
• As a customer you could feel.
• delighted,
• thrilled,
• excited or
• pleased

• puzzled,
• confused,
• indifferent or
• having mixed
• feelings

• disappointed,
• saddened,
• irritated or
• angered.

Understanding the feelings we may have as a
customer can help us improve our customer
service in marketing.
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What is the lifetime value of a single customer
to a business?
Example
I spend, each visit 250. I tell 3
friends (x 3) 750. X 4 Visits
Monthly 4,000. X 12 Months
48,000. X 20 Years 960,000!
Now Try your own calculation! What might be
your lifetime value as a customer to a favorite
store?
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Customer Loyalty Retention

• Share of Customer
• The share an organization gets of the customers
  purchasing in their product categories

How can we measure customer loyalty and
retention?

• Customer Lifetime Value
• The stream of purchases that the customer would
  make over his or her lifetime

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Customer Equity

• Customer equity is the total combined customer
  lifetime values of all of the organizations
  customers

Customer Equity (CE) clv1 clv2 clv3 .
clvn
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Evolving View of Marketings Role
Production
Marketing
Human Resources
Customer
Finance
The customer is the focus of the business, and
marketing as the integrative function
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Beware of Marketings
Dark Side
The Dark Side of Marketing represents
disrespect, dishonesty and unethical behavior in
relationships with customers, employees,
suppliers and competitors
Do you have an example of the Dark Side of
Marketing?
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Some Examples of the Dark Side of Marketing
Below are some examples of the Dark Side. You
may have others.

• Missed or broken promises by producers or service
  providers
• Producers or service providers who ignore or
  dismiss persistent customer complaints
• Poor product or service quality, delivered
  without recourse or apology
• Misleading advertising and promotion
• Marketing activities which deliberately exploit
  children, seniors or the uninformed
• .

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Changing Relationships in Marketing

• New marketing
• Focus on satisfying customer needs
• Develop customer relationships
• Serve profitable customers not
• every customer is a good customer
• Customize products/services
• Market locally and globally
• Be socially and environmentally responsible as
  well as for profits

• Old marketing
• Focus on products and sales ? Telling and
  Selling
• Make sales to customers
• Serve every customer
• Standardize products/services
• Market locally
• Be responsible for profits

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New Marketing Landscape

• Digital transition
• Rapid globalization
• Ethics social responsibility
• Not-for-profit marketing
• New world of marketing relationships

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Your TOP TEN Terms

• Dark Side of marketing
• Customer equity
• Customer lifetime value
• Customer relationship management (CRM)
• Naïve listening
• Needs, wants and demands
• Marketing offer
• Marketing concept
• Societal marketing concept
• Value proposition

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Looking BackWhere have we been?

• Define marketing. Outline the steps
• in the marketing process.
• Explain the value of customers. Identify the five
  marketing management orientations to the
  marketplace.
• Identify the key elements of a customer-driven
  marketing strategy.
• Discuss strategies for building customer
  relationships.
• Describe the major trends and forces of the new
  marketing landscape.