Title: Marketing: Managing Profitable Customer Relationships
1Marketing Managing Profitable Customer
Relationships
Chapter 1
2Market Product
- A market is the set of actual and potential
buyers of a product. These buyers share a
particular need or want that can be satisfied
through exchange relationships. - Product (Marketing Offer) physical product,
service, information, experience, person, place,
organization, and ideas.
3Examples of Product
4Definition of Marketing
- Marketing is the process of planning and
executing the conceptions, pricing, promotion and
distribution of ideas, goods, and services to
create exchanges that satisfy individual and
organizational goals. (AMA) - Marketing is meeting needs profitably.
5Marketing Philosophy
- The Production Concept
- The Product Concept
- The Selling Concept
- --------------------------------------------------
------ - The Marketing Concept
- The Customer Concept
- The Societal Marketing Concept
6The Production Concept
- Consumers will prefer products that are widely
available and inexpensive. - Focus achieving high production efficiency, low
costs, and mass distribution. - It is useful when (1) the demand for a product
exceeds the supply (2) the products cost is too
high. - Examples Standard Raw Materials and Components,
CD, LCD.
7The Product Concept
- Consumers will favor those products that offer
the most quality, performance, or innovative
features. - Focus making superior products and improving
them over time. - Examples Digital Camera, CPU.
- Better Mousetrap Fallacy
- Marketing Myopia. (Theodoes Levitt, 1965)
8The Selling Concept
- Consumers and businesses, if left alone, will
ordinarily not buy enough of organizations
products. - Focus undertake an aggressive selling and
promotion effort. - Examples unsought goods encyclopedias, funeral
plots, foundations.
9The Marketing Concept
- The key to achieving its organizational goals
consists of the company being more effective than
competitors in creating, delivering, and
communicating superior customer value to its
chosen target markets. - Slogans ???????, ????, ???????, We do it all for
you (Toyota). - Four pillars target market, customer needs,
integrated marketing and profitability.
10Figure 1.3 Contrasts Between the Sales Concept
and the Marketing Concept
11The Customer Concept
12The Societal Marketing Concept
- The organizations task is to determine the
needs, wants, and interests of target markets and
to deliver the desired satisfactions more
effectively and efficiently than competitors in a
way that preserves or enhances the consumers and
societys well-being. - Examples Body Shop HSBC Johnson Johnsons
Tylenol ?????.
13Needs, Wants and Demands
- Needs (??) the basic human requirements.
- Physical food, clothing, shelter, safety
- Social belonging, affection
- Individual learning, knowledge, self-expression
- Wants (??) when needs are directed to specific
objects that might satisfy the need. - Demands (??) wants for specific products backed
by an ability to pay.
14Demand States and Marketing Tasks
- Marketing managers are responsible for demand
management. - Negative Demand ? Counter Marketing, e.g.
insurance. - No Demand ? Stimulus, e.g. encyclopedias.
- Latent Demand ? Developing, e.g. iPod ??????
??????. - Declining Demand ? Remarketing, e.g. Arm
Hammers baking soda ? deodorizer school.
15Demand States and Marketing Tasks
- Marketing managers are responsible for demand
management. - Irregular Demand ? Synchromarketing (????), e.g.
ice cream museum. - Full Demand ? Maintain Marketing
- Overfull Demand ? Demarketing (???), e.g. Mister
Donut ??????. - Unwholesome Demand ? Social Marketing, e.g.
cigarettes drunk-driving.
16Customer Relationship Management (CRM)
- The overall process of building and maintaining
profitable customer relationships by delivering
superior customer value and satisfaction. - On average, it costs 5 to 10 times as much to
attract a new customer as it does to keep a
current customer satisfied. (Sears 12 times)
17Customer Perceived Value
- The difference between total customer value and
total customer cost. - Value chain, e.g. Wal-Mart.
- Value-delivery network, e.g. Honda.
18Customer Lifetime Value and Equity
- Customer lifetime value the value of the entire
stream of purchases that the customer would make
over a lifetime of patronage. - Lexus 600,000 Taco Bell 12,000 Supermarket
50,000. - Customer equity the total combined customer
lifetime values of all of the companys
customers. - Cadillac vs. BMW
19Selective Relationship Management
- Weed out losing customers and target winning ones
for pampering. - Examples Citibank First Chicago Bank Fidelity
Investment. - Risk future profits are hard to predict.
20Customer Relationship Groups
Profitability
21Share of Customer
- The portion of the customers purchasing in its
product categories that a company gets. - Methods to increase share of customer
- Offer greater variety to current consumers
- Train employees to cross-sell and up-sell in
order to market more products and services to
existing customers. - Amazon books, music, videos, gifts, toys,
consumer electronics, office products, and so on.
22Customer Satisfaction
- The extent to which a products perceived
performance matches a buyers expectation. - Smart companies aim to delight customers by
promising only what they can deliver, then
delivering more than they promise. - Examples Lexus Southwest Airlines Seasons
Hotels Nordstrom department store.
23Satisfying Customer Complaints
- Rate of dissatisfaction 25 rate of complaint
in dissatisfaction 5. - 50 of complaints report a satisfactory problem
resolution. - Examples Williams-Sonoma Enterprise Rent-A-Car.
- On average, satisfied ?3 people, and dissatisfied
? 11 people.
24Satisfying Customer Complaints
- Rate of complainant repurchase
Resolved Resolved quickly
Major complaints 34 52
Minor complaints 52 95
25Customer Relationship Levels and Tools
- Level of relationship basiclt reactive (e.g.
PG)ltaccountableltproactiveltpartnership (e.g.
Boeing). - Tools
- Add financial benefits, ex. frequent-flier
program. - Add social benefits, ex. club marketing program.
- Add structural ties, ex. McKesson FedEx.
26Discussion Question
In 1981, American Airlines first introduced the
AADVANTAGE frequent-flier program. When other
airlines copied this strategy, did they engage in
the prisoners dilemma?
27Prisoners Dilemma
Player 1 ? Player 2 Cooperate Fink
Cooperate 2, 2 3, -3
Fink -3, 3 -2, -2