Marketing: Managing Profitable Customer Relationships

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• Chapter 1
• Marketing Managing Profitable Customer
  Relationships

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Learning Goals

• Define marketing and the marketing process.
• Identify the five core marketplace concepts.
• Identify the elements of a customer-driven
  marketing strategy.
• Discuss customer relationship management and
  capturing value from customers.
• Describe the major trends and forces changing the
  marketing landscape.

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NASCAR What is their secret?

• Creating Value
• Compelling blend of live racing events, media
  coverage and Web sites
• Show the customer a good time
• Create wholesome family-oriented environment

• Capturing Value
• Fans spend nearly 700 a year on NASCAR
  merchandise
• Second highest regular season sport on TV
• NASCAR attracts over 250 big-name sponsors

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Learning Goals

• Define marketing and the marketing process.
• Identify the five core marketplace concepts.
• Identify the elements of a customer-driven
  marketing strategy.
• Discuss customer relationship management and
  capturing value from customers.
• Describe the major trends and forces changing the
  marketing landscape.

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What is Marketing?

• Marketing Defined
• Marketing is a social and managerial process by
  which individuals and groups obtain what they
  need and want through creating and exchanging
  value with others
• Marketing is about managing profitable customer
  relationships
• Attracting new customers
• Retaining and growing current customers

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The Marketing ProcessFigure 1-1
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Learning Goals

• Define marketing and the marketing process.
• Identify the five core marketplace concepts
• Identify the elements of a customer-driven
  marketing strategy
• Discuss customer relationship management and
  capturing value from customers
• Describe the major trends and forces changing the
  marketing landscape.

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Understanding the Marketplace
Core Concepts

• Need
• State of felt deprivation
• Wants
• The form of needs as shaped by culture and the
  individual
• Demands
• Wants which are backed by buying power

• Needs, wants, and demands
• Marketing offers including products, services
  and experiences
• Value and satisfaction
• Exchange, transactions and relationships
• Markets

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• This very successful campaign reminds the
  consumer of a need

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Marketing in Action
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Understanding the Marketplace
Core Concepts

• Marketing offer
• Combination of products, services, information or
  experiences that satisfy a need or want
• Offer may include services, activities, people,
  places, information or ideas

• Needs, wants, and demands
• Marketing offers including products, services
  and experiences
• Value and satisfaction
• Exchange, transactions and relationships
• Markets

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• This ad offers a product to meet sensitive
  needs of the older child

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Marketing in Action
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Understanding the Marketplace
Core Concepts

• Value
• Customers form expectations regarding value
• Marketers must deliver value to consumers
• Satisfaction
• A satisfied customer will buy again and tell
  others about their good experience

• Needs, wants, and demands
• Marketing offers including products, services
  and experiences
• Value and satisfaction
• Exchange, transactions and relationships
• Markets

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Discussion Questions Customer Satisfaction

• When have you, personally, been extremely
  satisfied or dissatisfied with a product? Why?
• Why is it so difficult for companies to deliver
  value to consumers?

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Marketing in Action
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Understanding the Marketplace
Core Concepts

• 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

• Needs, wants, and demands
• Marketing offers including products, services
  and experiences
• Value and satisfaction
• Exchange, transactions and relationships
• Markets

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Understanding the Marketplace
Core Concepts

• Market
• Set of actual and potential buyers of a product
• Marketers seek buyers that are profitable

• Needs, wants, and demands
• Marketing offers including products, services
  and experiences
• Value and satisfaction
• Exchange, transactions and relationships
• Markets

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Learning Goals

• Define marketing and the marketing process.
• Identify the five core marketplace concepts.
• Identify the elements of a customer-driven
  marketing strategy.
• Discuss customer relationship management and
  capturing value from customers.
• Describe the major trends and forces changing the
  marketing landscape.

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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?

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Selecting Customers and Creating Value

• What customers will we serve?
• Known as customer management
• Marketers select customers that can be served
  profitably
• How can we serve these customers best?
• By defining a value proposition
• Includes the set of benefits or values a company
  promises to deliver to consumers in order to
  satisfy their needs

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Netflix DVDs by Mail

• Netflix began in early 2000
• DVDs are delivered to your home with return mail
  envelope
• Monthly charge with unlimited rentals limited
  amount out at one time

Click on pop up ad for website
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Marketing in Action
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Discussion Questions Netflix

• How might Netflix define its target market?
• What need or want does it fulfill?
• What is its marketing offer?
• What is its value proposition? Is it a strong
  value proposition for its target market?

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Marketing in Action
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• Netflix was first to the market but a good value
  proposition invites competition.
• Walmart,
• a strong competitor, entered this market a few
  years later

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Marketing in Action
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Marketing Orientations

• Selling concept
• Marketing concept
• Societal marketing concept

• Production concept
• Product concept

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The Marketing Plan

• Transforms the marketing strategy into action
• Includes the marketing mix and the 4Ps of
  marketing
• Product
• Price
• Place
• Promotion

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Building Customer Relationships

• CRM Customer relationship management . . .is
  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.

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Learning Goals

• Define marketing and the marketing process.
• Identify the five core marketplace concepts.
• Identify the elements of a customer-driven
  marketing strategy.
• Discuss customer relationship management and
  capturing value from customers.
• Describe the major trends and forces changing the
  marketing landscape.

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Value and Satisfaction

• Perceived Value
• The customers evaluation of the difference
  between benefits and costs.
• Customers often do not judge values and costs
  accurately or objectively.
• Customer Satisfaction
• Products perceived performance relative to
  customers expectations.

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• This ad attempts to change the perceived value of
  Cheerios Cereal Bar by helping consumers evaluate
  its nutritional value

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Marketing in Action
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Not All Customers are Equal

• Basic relationships
• low margin customers
• Full partnerships
• key customers
• Selective relationship management
• weeding out unprofitable customers

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Capturing Value from Customers
Key Concepts

• Customer delight leads to emotional relationships
  and loyalty
• Customer lifetime value shows true worth of a
  customer

• Customer Loyalty and Retention
• Share of Customer
• Customer Equity

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Capturing Value from Customers
Key Concepts

• Share of customers purchase in a product
  category
• Achieved through offering greater variety,
  cross-sell and up-sell strategies

• Customer Loyalty and Retention
• Share of Customer
• Customer Equity

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Capturing Value from Customers
Key Concepts

• The combined customer lifetime values of all
  current and potential customers
• Measures a firms performance, but in a manner
  that looks to the future
• Choosing the best customers is key

• Customer Loyalty and Retention
• Share of Customer
• Customer Equity

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Learning Goals

• Define marketing and the marketing process.
• Identify the five core marketplace concepts.
• Identify the elements of a customer-driven
  marketing strategy.
• Discuss customer relationship management and
  capturing value from customers.
• Describe the major trends and forces changing the
  marketing landscape.

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Marketing Landscape
Challenges

• Advances in computers, telecommunications
  information, transportation
• Customer research and tracking
• Product development
• Distribution
• New advertising tools
• 24/7 marketing through the Internet

• Digital age
• Globalization
• Ethics and social responsibility
• Not-for-profit marketing
• Marketing relationships

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Marketing Landscape
Challenges

• Geographical and cultural distances have shrunk
• Greater market coverage
• More options for purchasing and manufacturing
• Increased competition from foreign competitors

• Digital age
• Globalization
• Ethics and social responsibility
• Not-for-profit marketing
• Marketing relationships

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Marketing Landscape
Challenges

• Marketers need to take great responsibility for
  the impact of their actions
• Caring capitalism is a way to differentiate your
  company

• Digital age
• Globalization
• Ethics and social responsibility
• Not-for-profit marketing
• Marketing relationships

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• This ad shows a company communicating its Caring
  Capitalism

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Marketing in Action
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Marketing Landscape
Challenges

• Many organizations are realizing the importance
  of strategic marketing
• Performing arts
• Government agencies
• Colleges
• Hospitals
• Churches

• Digital age
• Globalization
• Ethics and social responsibility
• Not-for-profit marketing
• Marketing relationships

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• The Internet is increasing as a channel for
  not-for-profit marketers to raise funds

Click on screenshot for website
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Marketing in Action
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Marketing Landscape
Challenges

• Profits through managing long-term customer
  equity
• Improve customer knowledge
• Target profitable customers
• Keep profitable customers

• Digital age
• Globalization
• Ethics and social responsibility
• Not-for-profit marketing
• Marketing relationships

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What is Marketing?

• The process of building profitable customer
  relationships by creating value for customers and
  capturing value in return

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Expanded model of the marketing processFigure 1.6
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Learning Goals

• Define marketing and the marketing process.
• Identify the five core marketplace concepts.
• Identify the elements of a customer-driven
  marketing strategy.
• Discuss customer relationship management and
  capturing value from customers.
• Describe the major trends and forces changing the
  marketing landscape.