Chapter One Marketing: Managing Profitable Customer Relationships

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Chapter OneMarketing Managing Profitable
Customer Relationships

• With Duane Weaver

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OUTLINE

• Marketing defined
• Marketing Mix defined
• Market - defined
• Marketing Process discussed
• Needs vs. Wants and Buyer Motivation
• P for Product deeper analysis
• OOPS Marketing Myopia
• Value
• Marketing Concepts
• Not for Profit Marketing

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What is Marketing?

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What is Marketing?

• a social and managerial process by which
  individuals and groups obtain what they need and
  want through creating and exchanging value with
  others.
• Armstrong, et. al., p. 7

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What is a Market?
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What is a Market?

• The set of actual and potential buyers of a
  product, service or experience.
• Also seen traditionally as a marketplace where
  the business transaction (or trade) is enacted
  between buyers and sellers. For example
• A bizarre
• Flea market
• Farmers market
• Retail Store
• Wholesale Outlet
• Online Internet Store
• Cell Phones digital radio waves
• In Marketing when we talk about potential markets
  we usually are referring to a set of buyers.
• These people share a need or want that can be
  satisfied through exchange relationships.

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What is successful Marketing?

• Attracting new customers by promising and
  delivering superior value.
• Building long-term relationships with customers
  by delivering continued customer satisfaction.
• Creating, building and managing these
  relationships profitably over time.

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What is the Marketing Mix?

P P P P
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The Four Ps (marketing mix)

• Product
• Price
• Place
• Promotion

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The Marketing Process

1. Understand the marketplace and customer needs and
   wants.
2. Design a customer-driven marketing strategy.
3. Construct a marketing program that delivers
   superior value.
4. Build profitable relationships and create
   customer delight.
5. Capture value from customers to create profits
   and customer equity.

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Needs vs. Wants and Buyer Motivation - needs

• Needs are states of felt deprivation.
• Physical
• Food, clothing, shelter, safety.
• Social
• Belonging, affection.
• Individual
• Learning, knowledge, self-expression.

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Abraham MaslowsHiearchy of Needs
Solomon, Zaichowsky, Polegato, 2008
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Needs vs. Wants and Buyer Motivation - wants

• SO then, what is a WANT?

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Needs vs. Wants and Buyer Motivation -
Motivational Strength

• Biological vs. Learned Needs
• (innate instinct vs. learned behaviour)
• Drive Theory
• (achieving homeostasis by satiating tension
  caused by the arousal of unpleasant states)
• Expectancy Theory
• pulled by positive incentives (goals) rather
  than pushed from within

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Needs vs. Wants and Buyer Motivation -
Motivational Direction

• MOTIVES tend to be directional
• Needs vs. Wants
• Need unsatisfied requirement (hunger)
• Want the way a person satisfies a need which
  ultimately is dependent on their historical
  reality (cheeseburger vs. trail mix)
• Types of Needs
• Biogenic or psychogenic
• Motivational Conflicts

Fig. 4-1 Solomon, Zaichowsky, Polegato, 2008
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P for product Deeper Analysis

• Products
• Anything that can be offered for
• acquisition,
• attention,
• use or consumption
• That might satisfy a need or want.
• Services
• Activities or benefits offered.
• Essentially intangible.
• Do not result in ownership of anything.
• Experiences
• Create, stage and market brand experiences.
• Attending live theatre, music concert.
• Ideas
• Solutions, consultation, patents, innovations.

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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.
• The great railroads lost out to the exploding
  trucking industry.
• They forgot that their business was solving
  transportation problems, not running railroads.

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Value and Satisfaction

• If the performance and the customers experience
  is lower than expectations, then customer
  satisfaction is low.
• If the performance and the customers experience
  meets expectations, then the customer is
  satisfied.
• If the performance and the customers experience
  exceeds expectations, then the customer is
  delighted.
• How can we do this?

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Core Marketplace Concepts

• Customers have needs, wants and demands.
• Marketers offer products or services.
• Customers seek value and satisfaction from
  offers.
• Demands and offers result in transactions and
  relationships.
• Markets are all potential customers with a
  similar demand.

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Customer-Driven Marketing

1. Divide markets into segments.
2. Choose the right segment to target.
3. Offer a unique value proposition.
4. Differentiate your offer from competitor offers.
5. Build customer value and satisfaction.
6. Nurture long-term customer relationships.

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Segmentation and Targeting

• Segmentation divides the market into groups of
  customers with varying needs and wants.
• Targeting selects the right segment to nurture.
• Types of Market Segmentation (see Chp. 2)
• Demographic variables
• Geographic location
• Behavioural variables
• Psychographic variables

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Demand Management

• Marketing management seeks to control demand.
• Increasing demand is the norm.
• Demarketing seeks to reduce demand in certain
  circumstances.

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Value Proposition

• The set of benefits or values the company
  promises to deliver to its target markets to
  satisfy their needs.

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Capturing Value In Return

• Customer lifetime value
• Share of customer
• Building Customer Equity
• The total combined customer lifetime value of all
  of the companys customers
• Combination of market share, share of customer
  and lifetime customer value
• Often a more accurate measure of a companys
  value than sales or market share

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Marketing Concepts

• Production affordability and availability.
• Product -- quality and innovation.
• Selling -- promotion and hard selling.
• Marketing -- customer satisfaction and
  relationships.
• Societal long-term value to both customer and
  society.

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Not-For-Profit Marketing

• Marketing of ideas, values and institutions.
• Increasing awareness that these organizations
  must build relationships with constituents and
  stakeholders.
• Challenge of using new marketing techniques for
  not-for-profit initiatives.

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Thanks!
Do Happy Customers Successful
Companies? Expectation Management is Key
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REVIEWLets Discuss your Marketing Examples

• What is good? Why?
• What is bad? Why?
• Please use what you have read and learned today
  to describe the reasons for your choices.