Marketing: Managing
Profitable Customer
Relationships
Chapter 1
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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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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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 is Marketing?
Kotler’s social definition:
“Marketing is a social and
managerial process by which
individuals and groups obtain
what they need and want through
creating and exchanging products
and value with others.”
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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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Figure 1-1:
Core Marketing Concepts
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Discussion Question
Resellers are a primary
market for Nike’s
products.
Describe the exchange
process between Nike
and resellers.
Think beyond the obvious.
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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
Demarketing:
Commuter
Connections
promotes the use
of mass transit
and carpooling as
an alternative to
driving alone.
Commuter
Connections
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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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Reconnecting with Teens
Modernizing the Girl Scouts
The Problem:
Campfires and cookies weren’t
cutting it with today’s teens.
Scouting was perceived as
NOT cool and primarily for
younger kids.
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Modernizing the Girl Scouts
The Solution
Goal: Adapt the
curriculum to the needs
of teens
Changed the “Product”:
Added activities related
to technology and
adventure sports:
rock-climbing, surfing,
martial arts
Goal: Promote a
cooler image for the
Girl Scouts
Campaign Theme:
“Join Troop 2002”
Target Market:
Diverse -- Girls of all
ages and all races
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Modernizing the Girl Scouts
The Solution
TV Ad Execution:
Japanimation style
visuals and throbbing
electronica music were
used to make scouting
seem “hip”.
Taglines: “Campfire
songs, the remix”; “Be
part of a girl band”.
TV Vehicles: MTV,
VH1, Animal Planet,
Nickelodeon (in TN,
KY, and AL regions).
Other Media Used:
Stylized posters sent
to schools, churches,
community centers;
interactive media.
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