Lesson – 3
In last Lesson we had a detailed view of Marketing process and core marketing concepts.
For today the focus of discussion is on the increasingly powerful role of customers in the
marketing process and the need for marketers to provide value that exceeds customer
expectations. Along with the concept of relationship marketing major functions
performed by the marketing are also presented so today we will be discussing the
following topics:
A. MARKETING FUNCTIONS
B. CUSTOMER RELATIONSHIP MANAGEMENT
Marketing Functions
There are eight Universal functions that are performed in marketing these are as shown in
fig these are Buying, selling, transporting, storing, standardizing and grading, financing
and finally risk taking now lets discuss
these one by one:
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Information
Buying
Buying: (Raw material to
produce goods and services and
Selling
to purchase finished goods or Risk Taking
services as retailer or whole
Universal
Marketing
Marketing
seller to sell them again for final
Functions
Functions
customers and consumers). It is
Transporting
a function that ensures that Financing
product offerings are available
in sufficient quantities to meet
Standardizing
Storing
and Grading
customer demands
Selling: The function to be
performed to sell the products/services/idea to satisfy customer needs or wants.
Using advertising, personal selling, and sales promotion to match goods and
services to customer needs
Transporting: Function related to create the availability of product or services. It
is used for moving products from their points of production to location convenient
for purchases
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Storing: Warehouses are used to store the products for further distribution.
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Standardizing and grading: To provide more quality products and services
without variation in the quality. Ensuring that product offerings meet established
and grading quality and quantity control standards of size, weight, and other
product variables
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Financing: Providing the financial resources to carry out different function e.g.
promotion of product and providing credit for channel members (wholesalers
retailers) or consumers
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Risk taking: Marketer takes a risk specifically when any new product is
introduced in a market because there are equal chances of success and failure.
Dealing with uncertainty about consumer purchases resulting from creation and
marketing of goods and services that consumers may purchase in the future
Securing Marketing Information: Collecting information about consumers,
competitors, information and channel members (wholesalers, and retailers) for use
in making marketing decisions Almost all marketing functions are based on
information acquired from external environment and information distributed out
of organization. Marketer seeks information to find out customer needs and wants
which are to be satisfied than after producing goods and services awareness about
the availability is required so that consumer can purchase the available goods and
services.
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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. Marketing management is the conscious effort to achieve desired
exchange outcomes with target markets. The marketer’s basic skill lies in influencing the
level, timing, and composition of demand for a product, service, organization, place,
person, idea, or some form of information.
Marketing Management is defined as the analysis, planning, implementation, and control
of programs designed to create, build, and maintain beneficial exchanges with target
buyers for the purpose of achieving organisational objectives. Which are:
Demand Management - marketing management is concerned with increasing demand,
as well as changing or even reducing demand. Marketing management is concerned not
only with finding and increasing demand, but also with changing or even reducing it.
1). Demarketing: Marketing to reduce demand temporarily or permanently; the
aim is not to destroy demand but only to reduce or shift it. Demarketing’s aim is to
reduce demand temporarily or permanently (move traffic away from a popular tourist
attraction during peak demand times).
2). In reality, marketing management is really demand management.
Building Profitable Customer Relationships - Beyond designing strategies to attract
new customers, marketing organizations also go all out to retain current customers and
build lasting customer relationships. (This is our second topic to be discussed today).
Customer Relationship Management
Before going in the detail of customer relationship marketing first we should know that
what is relationship marketing? It is basically Establishing a long-term continuous
relationship with the customer, initiated and managed by the firm. This relationship must
provide value to both parties. If a customer is lost, not only is that particular transaction
lost, but perhaps all future transactions throughout the life of that customer.
As discussed earlier that marketing is the
organizational function charged with defining
customer targets and the best way to satisfy
needs and wants competitively and profitably.
Since consumers and business buyers face an
abundance of suppliers seeking to satisfy their
every need, companies and nonprofit
organizations cannot survive today by simply
doing a good job. They must do an excellent job
if they are to remain in the increasingly
competitive global marketplace. Many studies
have demonstrated that the key to profitable
performance is to know and satisfy target
customers with competitively superior offers.
This process takes place today in an increasingly
global, technical, and competitive environment.
When marketing helps everyone in a firm really meet the needs of a customer both before
and after a purchase, the firm doesn’t just get a single sale. Rather, it has a sale and an
ongoing relationship with the customer. That’s why we emphasize that marketing
concerns a flow of need-satisfying goods and services to the customer. Often, that flow is
not just for a single transaction but rather is part of building a long-lasting relationship
that is beneficial to both the firm and the customer.
Customer Relationship
Management
1. CRM Customer relationship management
“CRM is the overall process of building and maintaining profitable customer
relationships by delivering superior customer value and satisfaction.” CRM Customer
relationship management can be defined: as strategies focused on increasing customer
satisfaction, loyalty, and profitability by leveraging superior customer knowledge
acquired, stored, and acted upon with the aid of information technology.
2. The basic goals of the CRM are:
Customer relationship marketing provides the key to retaining customers and involves
providing financial and social benefits as well as structural ties to the customers.
Companies must decide how much relationship marketing to invest in different market
segments and individual customers, from such levels as basic, reactive, accountable,
proactive, and full partnership. Much depends on estimating customer lifetime value
against the cost stream required to attract and retain these customers.
Total quality marketing is seen today as a major approach to providing customer
satisfaction and company profitability. Companies must understand how their customers
perceive quality and how much quality they expect. Companies must then strive to offer
relatively higher quality than their competitors. This involves total management and
employee commitment as well as measurement and reward systems. Marketers play an
especially critical role in their company’s drive toward higher quality. The basic goals of
CRM are:
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The idea of CRM is that it helps businesses use technology to gain insight into the
behavior of customers and the value of those customers. If it works as hoped, a
business can:
Provide better customer service
Make call centers more efficient
Help sales staff close deals faster
Simplify marketing and sales processes
Discover new customers Enable companies to provide excellent real-time
customer service by developing a relationship with each valued customer through
the effective use of individual account information
Based on customer attributes, companies can customize market offerings,
services, programs, messages, and media
Reduces the rate of customer defection
Increases the longevity of the customer relationship
Enhances the growth potential of each customer through “share of wallet,” crossselling, and up-selling
Makes low-profit customers more profitable or terminates them
Focuses disproportionate effort on high value customers
CRM is mainly based upon the customer loyalty that is of great importance for the
marketer because firms have realized the value of customer retention. Winning a new
customer is usually 5- 10 times more costly than retaining an existing customer
Customers are usually more profitable the longer you keep them. The value of loyalty
goes beyond single customer for the reason that loyal customers provide more and more
credible referrals but the angry gossip of disloyal customers can devastate a firm.
3. Building Profitable Customer Relationships
Managing demand means managing customers because:
1. A demand comes from new customers and repeat customers.
2. Today, besides making efforts to attract new customers, marketers are going all
out to retain and build relationships with existing customers. It costs five times as
much to attract a new customer as it does to keep a current customer satisfied.
3. Because of changing demographics, a slow-growth economy, more sophisticated
competitors, and overcapacity in many industries, many markets and market
shares are shrinking. The key to successful customer retention is superior
customer value and satisfaction.