A Brief Introduction to
Marketing and Customer
Relationship Building
Jeremy Kees, Ph.D.
Who is Jeremy Kees??
CONSUMER
• American Marketing Association’s
new official definition of marketing
released August 2007:
– Marketing is the activity, set of
institutions, and processes for
creating, communicating, delivering,
and exchanging offerings that have
value for customers, clients, partners,
and society at large.
• Kotler & Keller’s definition of
marketing management:
– The art and science of choosing
target markets and getting, keeping,
and growing customers through
creating, delivering, and
communicating superior customer
value.
Value, Value, Value
• Successful products and services
deliver value and satisfaction to
customers
– We make buying decisions based on
which product is perceived to offer
the most value
– Tangible/Intangible benefits vs. cost
How do we create customers?
– Identifying customer needs
– Designing goods and services that meet
those needs
– Communicate Information about those
goods and services to prospective buyers
– Making the goods or services available at
times and places that meet customers’ needs
– Pricing goods and services to reflect costs,
competition, and customers’ ability to buy
– Providing for the necessary service and
follow-up
How do we create VALUE?
• Identify the needs in the marketplace
• Find out which needs the organization can
profitably serve
• Design goods and services that meet those
needs
• Developing a marketing mix that will convert
potential customers into actual customers
• Providing for the necessary service and followup after the service
“4 Eras” of Marketing
From transaction-based marketing to
relationship marketing…
• Transaction–based marketing
(Simple exchanges)
• Relationship marketing
– Lifetime value of a customer
– Converting new customers to
advocates
From transaction-based marketing to
relationship marketing…
Transaction vs. Relationship
Marketing
Three Levels of Relationship Marketing
Characteristic
Level 1
Level 2
Level 3
Primary bond
Financial
Social
Structural
Degree of
customization
Low
Medium
Medium to high
Potential for
sustained
competitive
advantage
Low
Moderate
High
Let’s take a step back…
• Although it is very important to try
to build relationships with
customers to ensure LT success
• But, it is just as important to
determine which consumers we
want this relationship with!!
– Target Market
– “Costly” Consumers
– Sprint Video
Customer Relationship
Management (CRM)
The combination of strategies and tools
that drive relationship programs, reorientating the entire organization to a
concentrated focus on satisfying
customers
Strategies for Building
Customer Relationships
• Affinity Programs
– a marketing effort sponsored by an
organization that solicits responses
from individuals who share common
interests and activities
– BOA
Strategies for Building
Customer Relationships
• Frequency Marketing
– frequent-buyer or user marketing
programs that reward customers with
cash, rebates, merchandise, or other
premiums
– Examples??
– Thankyou Rewards Spot
– But not just for hotels and
airlines…
Strategies for Building
Customer Relationships
• Database Marketing
– software that analyzes marketing
information, then identifies and
targets messages toward specific
groups of potential customers
– http://www.wyndham.com
Strategies for Building B2B
Relationships
• Strategic alliance
– a partnership formed to create a
competitive advantage
– These more formal long-term
partnership arrangements improved
each partner supply-chain
relationships and enhance flexibility
– Wal-Mart!
Strategies for Building B2B
Relationships
• Electronic Data Interchange (EDI)
– involves computer-to-computer
exchanges of invoices, orders, and
other business documents
• Vendor Managed Inventory (VMI)
– is an inventory-management system
in which the seller–based on existing
agreement with a buyer– determines
how much of a product is needed
Strategies for Building B2B
Relationships
• Database Marketing
– software that analyzes marketing
information, then identifies and
targets messages toward specific
groups of potential customers
Evaluating Relationships
• Lifetime Value (LTV)
– Refers to the net present value of the
potential revenue stream for any particular
customer over a # of years
– Starts with current purchase activity then
extrapolates to include potential additions
from cross-selling, upgrades, total
ownership, etc.
Marketing Concept
• Based on Consumer Orientation
– 100% focus toward the consumer
– Consumer drives company-wide
decisions
• Focused on LONG TERM success
Building Buyer-Seller
Relationships
• Many customers are seeking ways to simplify
their lives, and relationships provide a way to
do this
• Customers find comfort with brands that have
become familiar through their ongoing
relationships with companies or when they feel
like they can relate to a company
– Dove’s Campaign for REAL Beauty
• Evolution
• Such relationships often lead to more efficient
decision-making my customers and higher
levels of customer satisfaction
The Value of Customer Retention
• On average, it costs over 10
TIMES more to acquire a new
customer versus retain an existing
one
• A 5% gain in customer retention
can result in an 80% gain in
profits.