Marketing: Managing
Profitable Customer
Relationships
Chapter 1
1
Learning Goals
1.
Define marketing and the marketing process.
2.
Explain the importance of understanding customers and
identify the five core marketplace concepts
3.
Identify the elements of a customer-driven marketing
strategy and discuss the marketing management
orientations.
4.
Discuss customer relationship management
What is Marketing?

Marketing Defined:
“The process by which companies create
value for the customers and build strong
customer relationships in order to capture
value from customers in return”

Marketing is about managing profitable
customer relationships

The twofold goal of marketing is

Attracting new customers
Retaining and growing current customers
Goal 1: Define marketing and the marketing process.
The Marketing Process
Create value for customers and build
customer relationships
Understand
the
marketplace
and
customer
needs and
wants
Design a
Customerdriven
marketing
strategy
Construct a
marketing
program
that
delivers
superior
value
Capture value from customers in
return
Build
profitable
relationships
and create
customer
delight
Capture
value
from
customers
to create
profits
and
customer
quality
Goal 1: Define marketing and the marketing process.
Understanding the Marketplace and
customer needs
Needs, wants, and demands
 Need



Wants



State of felt deprivation
Example: Need food
The form needs as shaped by culture and the
individual
Example: Want a Big Mac
Demands

Wants which are backed by buying power
Understanding the Marketplace and
customer needs

Marketing offers:









Products
Services
Events
Experiences
Persons
Places
Ideas
Organizations
Information
Understanding the Marketplace and
customer needs


Value and satisfaction
Value

Customer-perceived value




Customer’s evaluation of the difference between all the
benefits and all the cost of a market offering relative to
those of competing products.
Customers form expectations regarding value
Marketers must deliver value to consumers
Satisfaction

Customer satisfaction


The extent to which a product’s perceived performance
matches a buyer’s expectations
A satisfied customer will buy again and tell others about
their good experience
Understanding the Marketplace and
customer needs


Exchange, transactions and relationships
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
Markets
Market


Set of actual and potential buyers of a product
Marketers seek buyers that are profitable
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?
Goal 3: Identify elements of a customer-driven strategy.
Marketing Management

Selecting customers to serve
Dividing the market into segments of
customers- Market segmentation
 Selecting which segments it will go afterTarget marketing
 Demarketing


Value proposition

Set of benefits or values it promises to deliver
to customers to satisfy their needs.
Value Proposition
iPhone
Nokia
Nokia
Marketing Management Orientations
Production concept
 Product concept

Selling concept
 Marketing concept

□ Societal marketing concept
Goal 3: Identify elements of a customer-driven strategy.
The Production Concept

Assumes that consumers are interested
primarily in product availability at low
prices

Marketing objectives:



Cheap, efficient production
Intensive distribution
Market expansion
The Product Concept

Assumes that consumers will buy the
product that offers them the highest
quality, the best performance, and the
most features

Marketing objectives:


Quality improvement
Addition of features
Marketing Myopia

A focus on the existing product only rather than
the consumer needs it presumes to satisfy

Management’s failure to recognize the scope of
the business

Product-oriented rather than customer-oriented
management endangers future growth
Avoiding Marketing Myopia by focusing on
benefits
Company
Myopic Description Marketing oriented
description
Cingular
“We are a telephone
company”
“We are a communications
company”
JetBlue Airways “We are in the airline “We are in the transportation
business”
business”
Sony
“We are in the video
game business”
We are in the entertainment
Business
The Selling Concept

Assumes that consumers are unlikely to
buy a product unless they are
aggressively persuaded to do so

Marketing objectives:


Sell, sell, sell
Lack of concern for customer needs and
satisfaction
The Marketing Concept

Assumes that to be successful, a company
must determine the needs and wants of
specific target markets and deliver the
desired satisfactions better than the
competition

Marketing objectives:
 Profits through customer satisfaction
Societal Marketing Concept
• Assumes that marketing strategy should
deliver value to customers in a way that
maintain and improves both the consumer’s
and society’s well-being
Society
(Human Welfare)
Consumers
(Want Satisfaction)
Societal
Marketing
Concept
Company
(Profits)
The Marketing Plan
Transforms the marketing strategy into
action
 Includes the marketing mix -The 4P’s of
marketing





Product
Price
Place
Promotion
Goal 3: Identify elements of a customer-driven strategy.
Marketing mixes- 4P’s

Product


Price


Decide how much it will charge for the offer
Place


Firm must first create a need satisfying market
offering
Decide how it will make the offer available to
target consumers
Promotion

Communicate with target customers about the
offer and persuade them of its merit
Goal 3: Identify elements of a customer-driven strategy.
Building Customer Relationships

CRM–Customer relationship
management

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.
Goal 4: Discuss CRM