Marketing: Managing
Profitable Customer
Relationships
Chapter 1
c
Amazon
Strong sales, no
profits
Customer-driven
to its core
Each customer’s
experience is
unique
Provides great
selection, good
value, discovery
as well as
convenience
A true online
community
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Objectives
Be able to define marketing and
discuss its core concepts.
Be able to define marketing
management and compare the
five marketing management
orientations.
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Objectives
Understand customer
relationship management
and strategies.
Realize the major challenges
facing marketers in the new
“connected” millennium.
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Why Study Marketing?
You are paying a lot for it.
 it is estimated that marketing
costs consumers 50 cents of
each dollar spent.
It effects almost every aspect of
your daily life
Your future job requires that you
work with marketers -
What is Marketing?
Process by which individuals and
groups obtain what they need and
want through creating and
exchanging products and value
with others.
Simply put: Marketing is the
delivery of customer satisfaction
at a profit.
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What is Marketing?
Marketing is managing profitable
customer relationships
 Attracting new customers
 Retaining and growing current
customers
“Marketing” is NOT synonymous
with “sales” or “advertising”
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What Can Be
Marketed?
Goods
Services
Places
Ideas
Events
Persons
Properties
Organizations
Information
Experiences
What is being
marketed in this ad?
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Core Marketing Concepts*
(Fig. 1-1)
Markets
Needs, wants,
and demands
Value,
satisfaction,
and quality
Products
and services
Exchange,
transactions,
and relationships
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What are Consumer’s Needs, Wants
and Demands?
Needs - state of felt deprivation for basic
items such as food and clothing and
complex needs such as for belonging. i.e. I
am hungry.
Wants - form that a human need takes as
shaped by culture and individual personality.
i.e. I want a hamburger, French fries, and a
soft drink.
Demands - human wants backed by buying
power. i.e. I have money to buy this meal.
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Types of Need
physical needs
food, clothing, shelter
social needs
belonging, acceptance
individual needs
knowledge, self-esteem
Market = Aggregation of
Needs
Resources to
Exchange
Willingness to
Exchange
Market –
Ethical
Buyers who
share a
particular need
or want that
can be satisfied
Attitudes
through
of
exchange
Others or
relationships.
Unexpected
Situational
Factors
People Who
Exhibit Need
Actual
Buyers
Potential
Buyers
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What Will Satisfy Consumer’s
Needs and Wants?
Products
Anything that can be Offered to a Market to Satisfy a Need or Want
Experiences
Persons
Organizations
Information
Places
Ideas
Services
Activities or Benefits Offered for Sale That Are Essentially
Intangible and Don’t Result in the Ownership of Anything
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How Do Consumers Obtain
Products and Services?
Exchanges
Transactions
Relationships*
Relationship Marketing:
Text page 11
How does Saturn build lasting relationships with customers?
Building a Marketing
Network Consisting of
The Company and All
Its Supporting
Stakeholders
Click or Press Space Bar to Return
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Exchange*
something for something: QUID PRO
QUO - a basic concept in marketing
requires at least two parties
each must have something of value to
the other
Free to accept/reject the offer
Must be able to communicate and
deliver
No Exchange =
Self Sufficiency
If you can produce everything you need
you don't need exchange ....
 Hermits, Old Order Oregonians,
Survivalist
How Do Consumers Choose
Choose Among Products and
Services?
Value Gained From Owning a Product and
Costs of Obtaining the Product is
Customer Value
Product’s Perceived Performance in Delivering Value
Relative to Buyer’s Expectations is
Customer Satisfaction
Customer Loyalty
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Figure 1-2:
Elements of a
Modern Marketing System
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Marketing Management
Marketing management is “the
art and science of choosing
target markets and building
profitable relationships with
them.”
 Creating, delivering and
communicating superior
customer value is key.
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Marketing Management
Customer Management:
 Marketers select customers that
can be served well and profitably.
Demand Management:
 Marketers must deal with different
demand states, ranging from no
demand to too much demand.
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Marketing Management
Production
Concept
Management
Orientations
Selling
Concept
Product
Concept
Marketing
Concept
Societal
Marketing
Concept
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Figure 1-3:
The Selling and Marketing
Concepts Contrasted
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Figure 1-4:
Considerations Underlying the
Societal Marketing Concept
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Figure 1-5:
Relationship Between Customer
Satisfaction and Loyalty
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CRM
Customer relationship
management (also called CRM)
is defined as:
“the overall process of building
and maintaining profitable
customer relationships by
delivering superior customer
value and satisfaction.”
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CRM
It costs 5 to 10 times MORE to
attract a new customer than it
does to keep a current
customer satisfied.
Marketers must be
concerned with the
lifetime value of the
customer.
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BusinessNow
SatMetrix Video Clip
View what the
experts have to say
about customer
loyalty and the
bottom line.
Click the picture above to play video
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CRM
Key Concepts
Attracting,
retaining and
growing
customers
Building
relationships and
customer equity
Customer value and
satisfaction
 Perceptions are key
 Created by meeting/
exceeding expectations
Loyalty and retention
 Many benefits of loyalty
 Increases as satisfaction
levels increase
 Delighting consumers
should be the goal
Growing customer share
 Cross-selling
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CRM
Key Concepts
Attracting,
retaining and
growing
customers
Building
relationships and
customer equity
Customer equity
 Total combined
customer lifetime
values of all
customers
 Measures firm’s
performance, but in
a manner that looks
to the future
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CRM
Key Concepts
Attracting,
retaining and
growing
customers
Building
relationships and
customer equity
Customer relationship
levels and tools
 Target market typically
dictates type of
relationship
Basic relationships
 Full relationships

 Customer loyalty and
retention programs
Adding financial
benefits
 Adding social benefits
 Adding structural ties

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Marketing Challenges
Technological advances, rapid
globalization, and continuing
social and economic shifts are
causing marketplace changes.
Major marketing developments
can be grouped under the theme
of Connecting.
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Figure 1-6:
Today’s Marketing Connections
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Marketing Challenges
Connecting
Via technology
With customers
With marketing
partners
With the world
Advances in computers,
telecommunications,
video-conferencing, etc.
are major forces
 Databases allow for
customization of
products, messages
and analysis of needs
The Internet
 Facilitates anytime,
anywhere connections
 Facilitates CRM
 Creates marketspaces
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Marketing Challenges
Connecting
Via technology
With customers
With marketing
partners
With the world
Selective relationship
management is key
 Customer profitability
analysis separates
winners from losers
Growing “share of
customer”
 Cross-selling and upselling are helpful
Direct sales to
buyers are growing
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Marketing Challenges
Connecting
Via technology
With customers
With marketing
partners
With the world
Partner relationship
management
involves:
 Connecting inside
the company
 Connecting with
outside partners
 Supply
chain
management
 Strategic alliances
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Marketing Challenges
Connecting
Via technology
With customers
With marketing
partners
With the world
Globalization
 Competition
 New opportunities
Greater concern for
environmental and
social responsibility
Increased marketing
by nonprofit and
public-sector entities
 Social marketing
campaigns
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Connecting with
Values . . .
The Body Shop
Visit the “Our Values” and “About Us” sections of
The Body Shop’s web site.
How might the values espoused by the company
influence the manner in which the Body Shop . . .
The Body Shop
•
•
•
•
Chooses their strategic partners?
Advertises fragrances to consumers?
Develops new products?
How might these decisions in turn
impact “the bottom line”?
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