1
Principles of Marketing
Marketing: Managing
Profitable Customer
Relationships
Learning Objectives
After studying this chapter, you should be able to:
1.
Define marketing and outline the steps in the marketing
process
2.
Explain the importance of understanding customers and the
marketplace, and identify the five core marketplace concepts
3.
Identify the key elements of a customer-driven marketing
strategy and discuss the marketing management orientations
that guide marketing strategy
4.
Discuss customer relationship management, and identify
strategies for creating value for customers and capturing value
from customers in return
5.
Describe the major trends and forces that are changing the
marketing landscape in this age of relationships
1-2
Chapter Concepts
1.
2.
3.
4.
5.
6.
7.
8.
What Is Marketing?
Understanding the Marketplace and Customer Needs
Designing a Customer-Driven Marketing Strategy
Preparing an Integrated Marketing Plan and Program
Building Customer Relationships
Capturing Value from Customers
The New Marketing Landscape
So, What Is Marketing? Pulling It All Together
1-3
What Is Marketing?
Marketing Defined
Marketing is the process by which companies
create value for customers and build strong
customer relationships to capture value from
customers in return
1-4
What Is Marketing?
The Marketing Process
1.
2.
3.
4.
5.
Understand the marketplace and customer wants
and needs
Design a customer-driven marketing strategy
Construct a marketing plan that delivers superior
value
Build profitable relationships and create customer
satisfaction
Capture value from customers to create profit and
customer equity
1-5
Understanding the Marketplace
and Customer Needs
Customer Needs, Wants, and Demands
•
Needs are states of deprivation
•
Physical—food, clothing, warmth, safety
•
Social—belonging and affection
•
Individual—knowledge and selfexpression
1-6
Understanding the Marketplace
and Customer Needs
Customer Needs, Wants, and Demands
Wants are the form that needs take as they
are shaped by culture and individual
personality
Demands are wants backed by buying power
1-7
Understanding the Marketplace
and Customer Needs
Market Offerings—Products, Services, and
Experiences
Market offerings are some combination of
products, services, information, or
experiences offered to a market to satisfy a
need or want
1-8
Understanding the Marketplace
and Customer Needs
Market Offerings—Products, Services, and
Experiences
Marketing myopia is focusing only on existing
wants and losing sight of underlying
consumer needs
Exchange is the act of obtaining a desired
object from someone by offering something
in return
1-9
Understanding the Marketplace
and Customer Needs
Customer Value and Satisfaction
•
Expectations
•
Customers
•
•
Value and satisfaction
Marketers
•
Set the right level of expectations
•
Not too high or too low
1-10
Understanding the Marketplace
and Customer Needs
Exchanges and Relationships
Exchange is the act of obtaining a desired
object from someone by offering
something in return
Relationships consist of actions to build
and maintain desirable relationships
1-11
Understanding the Marketplace
and Customer Needs
Markets are the set of actual and potential buyers
of a product
Marketing system consists of all of the actors
(suppliers, company, competitors,
intermediaries, and end users) in the system
who are affected by major environmental forces
•
Demographic
•
Economic
•
Physical
•
Technological
•
Political–legal
•
Socio-cultural
1-12
Designing a Customer-Driven
Marketing Strategy
Marketing Management
Marketing management is the art and
science of choosing target markets and
building profitable relationships with them
•
What customers will we serve?
•
How can we best serve these customers?
1-13
Designing a Customer-Driven
Marketing Strategy
Selecting Customers to Serve
Market segmentation: Dividing the markets
into segments of customers
Target marketing: Which segments to go
after
1-14
Designing a Customer-Driven
Marketing Strategy
Selecting Customers to Serve
De-marketing: Marketing to reduce demand
temporarily or permanently; the aim is not
to destroy demand but to reduce or shift it.
1-15
Designing a Customer-Driven
Marketing Strategy
Selecting Customers to Serve
Marketing management is:
•
Customer management
•
Demand management
1-16
Designing a Customer-Driven
Marketing Strategy
Choosing a Value Proposition
The value proposition is the set of
benefits or values a company
promises to deliver to customers
to satisfy their needs
1-17
Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
•
•
•
•
•
Production concept
Product concept
Selling concept
Marketing concept
Societal concept
1-18
Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
Production concept is the idea that
consumers will favor products that are
available or highly affordable
1-19
Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
Product concept is the idea that consumers
will favor products that offer the most
quality, performance, and features for which
the organization should therefore devote its
energy to making continuous improvements
1-20
Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
Selling concept is the idea that consumers
will not buy enough of the firm’s products
unless it undertakes a large scale selling and
promotion effort
1-21
Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
Marketing concept is the idea that achieving
organizational goals depends on knowing
the needs and wants of the target markets
and delivering the desired satisfactions
better than competitors do
1-22
Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
Societal marketing concept is the idea that
a company should make good marketing
decisions by considering consumers’ wants,
the company’s requirements, consumers’
long-term interests, and society’s long-run
interests
1-23
Preparing an Integrated
Marketing Plan and Program
Marketing Mix
The marketing mix is the set of tools (four
Ps) the firm uses to implement its marketing
strategy
•
Product
•
Price
•
Promotion
•
Place
1-24
Preparing an Integrated
Marketing Plan and Program
Integrated Marketing Program
Integrated marketing program is a
comprehensive plan that communicates and
delivers the intended value to chosen
customers
1-25
Building Customer Relationships
Customer Relationship Management
(CRM)
Customer relationship management is the
overall process of building and maintaining
profitable customer relationships by
delivering superior value and satisfaction
1-26
Building Customer Relationships
Customer Relationship Management
(CRM)
Customer perceived value is the difference between
total customer value and total customer cost
Customer satisfaction is the extent to which a
product’s perceived performance matches a buyer’s
expectations
1-27
Building Customer Relationships
Customer Relationship Management
(CRM)
Customer Relationship Levels and Tools
•
•
•
•
Basic relationship
Full relationships
Frequency marketing programs
Club marketing programs
1-28
Building Customer Relationships
The Changing Nature of Customer Relationships
Relating with more carefully selected customers
uses selective relationship management to target
fewer, more profitable customers
Relating for the long term uses customer
relationship management to retain current
customers and build profitable, long-term
relationships
Relating directly uses direct marketing tools
(telephone, mail order, kiosks, Internet) to make
direct connections with customers
1-29
Building Customer Relationships
Partner Relationship Management
Partner relationship management refers to
working closely with partners in other
company departments and outside the
company to jointly bring greater value to
customers
1-30
Building Customer Relationships
Partner Relationship Management
Partners inside the company is every function area
interacting with customers
•
Electronically
•
Cross-functional teams
Partners outside the company is how marketers
connect with their suppliers, channel partners, and
competitors by developing partnerships
1-31
Building Customer Relationships
Partner Relationship Management
Supply chain is a channel that stretches from
raw materials to components to final
products to final buyers
•
Supply management
•
Strategic partners
•
Strategic alliances
1-32
Capturing Value from Customers
Creating Customer Loyalty and Retention
Customer lifetime value is the value of
the entire stream of purchases that the
customer would make over a lifetime of
patronage
1-33
Capturing Value from Customers
Growing Share of Customer
Share of customer is the portion of the
customer’s purchasing that a company gets
in its product categories
1-34
Capturing Value from Customers
Building Customer Equity
Customer equity is the total combined
customer lifetime values of all of the
company’s customers
1-35
Capturing Value from Customers
Building Customer Equity
Building the right relationships with the
right customers involves treating
customers as assets that need to be
managed and maximized
•
Different types of customers require different
relationship management strategies
•
Build the right relationship with the right
customers
1-36
The New Marketing Landscape
Major Developments
•
•
•
•
Digital age
Globalization
Ethics and social responsibility
Not-for-profit marketing
1-37
The New Marketing Landscape
The New Digital Age
Recent technology has had a major impact on the
ways marketers connect with and bring value to
their customers
Market research
•
•
•
Learning about and tracking customers
Create new customized products
Distribution
Communication
•
•
•
•
•
Video conferencing
Online data services
1-38
The New Marketing Landscape
The New Digital Age
Internet—creates marketplaces and
marketspaces
•
Information
•
Entertainment
•
Communication
1-39
The New Marketing Landscape
Rapid Globalization
•
•
The world is smaller
Think globally, act locally
1-40
The New Marketing Landscape
The Call for More Ethics and Social Responsibility
Marketers are being called upon to take greater
responsibility for the social and
environmental impact of their actions in a
global economy
1-41
The New Marketing Landscape
The Call for More Ethics and Social Responsibility
Social marketing campaigns encourage
energy conservation and concern for the
environment or discourage smoking,
excessive drinking, and drug use
1-42
The New Marketing Landscape
The Growth for Not-for-Profit Marketing
•
•
•
•
•
•
Colleges
Hospitals
Museums
Zoos
Orchestras
Religious groups
1-43
PowerPoint created by:
Ronald Heimler






Dowling College, MBA
Georgetown University, BS Business
Administration
Adjunct Professor, LIM College, NY
Adjunct Professor, Long Island University,
NY
Lecturer, California Polytechnic State
University, Pomona, CA
President, Walter Heimler, Inc.