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Marketing:
Managing Profitable Customer
Relationships
ROAD MAP: Previewing the Concepts
• Define marketing and outline the steps in the marketing
•
•
•
•
process.
Explain the importance of understanding customers and
the marketplace, and identify the five core marketplace
concepts.
Identify the key elements of a customer-driven
marketing strategy and discuss the marketing
management orientations that guide marketing strategy.
Discuss customer relationship management and
strategies for building lasting customer relationships.
Describe the major trends and forces that are changing
the marketing landscape in this new age of
relationships.
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What Is Marketing?
• Simple Definition: Marketing is
managing profitable customer
relationships.
Goals:
1. Attract new customers by promising
superior value.
2. Keep and grow current customers
by delivering satisfaction.
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Marketing Old vs. New
Old view of marketing:
Making a sale -- “Telling and Selling”
New view of marketing:
Satisfying customer needs
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Marketing Defined
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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A Simple Model of 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
equity
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What are Consumers’
Needs, Wants, and
Demands?
This Is a Need
Needs - state of felt
deprivation
including physical,
social, and
individual needs.
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Types of Needs
• Physical:
– Food, clothing, shelter, safety
• Social:
– Belonging, affection
• Individual:
– Learning, knowledge, self-expression
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This Is a Want
Wants - form that
a human need
takes, as
shaped by
culture and
individual
personality.
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This Is Demand
Wants
Buying Power
“Demand”
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Need / Want Fulfillment
• Needs and Wants
Fulfilled through a
Marketing Offer :
– Some combination of
products, services,
information, or
experiences offered to a
market to satisfy a need
or want.
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What Satisfies Consumers’
Needs and Wants?
Products
Anything that can be Offered to a Market to Satisfy a Need or Want
Persons
Places
Information
Organizations
Ideas
Services
Activity or Benefit Offered for Sale That is Essentially
Intangible and Does Not Result in the Ownership of Anything
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Product as an Idea
Products do not
have to be physical
objects. Here the
“product” is an
idea—protecting
animals.
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Marketing Myopia
• Sellers pay more
•
attention to the specific
products they offer than
to the benefits and
experiences produced
by the products.
They focus on the
“wants” and lose sight
of the “needs.”
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Value and Satisfaction
Expectation
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Performance
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Expectation
Performance
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8
If performance is lower than expectations, satisfaction is low.
If performance is higher than expectations, satisfaction is high.
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Exchange vs. Transaction
• Exchange:
– Act of obtaining a desired object from
someone by offering something in return.
• Transaction:
– A trade of values between two parties.
– One party gives X to another party and
gets Y in return. Can include cash, credit,
check, or barter.
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What is a Market?
• The set of actual
and potential buyers
of a product.
• These people share
a need or want that
can be satisfied
through exchange
relationships.
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Elements of a Modern Marketing
System
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Marketing Management
• The art and science of choosing target
markets and building profitable
relationships with them.
Questions to ask:
1. What customers will we serve?
What is our target market?
2. How can we best serve these customers?
What is our value proposition?
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Segmentation and Target Marketing
#1
#2
Market Segmentation:
Divide the market into
segments of customers
Target Marketing:
Select the segment to
cultivate
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Interactive Student
Assignment
• Pair up with another student and share
your thoughts with one another on the
following items:
– To what market segments do you think you
belong?
– What personal traits, variables, or factors
characterize you as belonging to those
segments?
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Marketing Management
Demand
Management
Demarketing
Finding and increasing
demand, also changing or
reducing demand, such as in
demarketing.
Temporarily or permanently
reducing the number of
customers or shifting their
demand.
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Value Proposition
• The set of benefits
or values a company
promises to deliver
to consumers to
satisfy their needs.
It cleans and freshens like
sunshine!
www.gainlaundry.com
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Marketing Management Philosophies
Societal Marketing Concept
Marketing Concept
Selling Concept
Product Concept
Production Concept
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Marketing and Sales Concepts Contrasted
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Customer-Driven Marketing
How many of us would
have thought to ask for
a “wearable” PC?
Marketers must often
understand customer
needs even better than
customers themselves
do.
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Societal Marketing Concept
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Interactive Student
Assignment
• Pair up with another student and share
your thoughts with one another on the
following topic:
– Based on your personal experience, discuss
with your partner ways you have seen
organizations implement the societal
marketing concept.
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The Marketing Mix
Product
Price
Customer
Needs
Promotion
Distribution
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Customer Relationship Management
• The process of
building and
maintaining
profitable customer
relationships by
delivering superior
customer value and
satisfaction.
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Customer Perceived Value
• Customer’s evaluation
of the difference
between all the
benefits and all the
costs of a marketing
offer relative to those
of competing offers.
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Customer Perceived Value
Is FedEx’s service worth the higher price? FedEx thinks so. It
promises reliability, speed, and peace of mind. FedEx ads say
“Need to get it there or else? Don’t worry. There’s a FedEx for
that.”
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Customer Satisfaction
• Dependent on the
product’s perceived
performance relative
to a buyer’s
expectations.
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Customer Relationship Levels
Basic
Relationship
Continuum
Full
Partnership
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Loyalty and Retention
Social
Benefits
Financial
Benefits
Structural
Ties
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Partner Relationship Marketing
Partners Inside the Firm
1. All employees customer
focused
2. Teams coordinate efforts
toward customers
Partners Outside the Firm
1. Supply chain management
2. Strategic alliances
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Customer Loyalty & Retention
• Customer Lifetime Value
– The entire stream of
purchases that the customer
would make over a lifetime of
patronage.
• Share of Customer
– The share a company
gets of the customers
purchasing in their
product categories.
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Customer Lifetime Value
To keep customers coming back, Stew Leonard’s has created the
“Disneyland of dairy stores.” Rule #1—the customer is always
right. Rule #2—if the customer is ever wrong, reread Rule #1.
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Customer Equity
• Customer equity
is the total
combined
customer lifetime
values of all the
company’s
customers.
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Customer Relationship Groups
Butterflies
High
Good fit between
company’s offerings and
customer’s needs; high
profit potential
True Friends
Good fit between
company’s offerings and
customer’s needs; highest
profit potential
Profitability
Strangers
Low
Little fit between company’s
offerings and customer’s
needs; lowest profit
potential
Barnacles
Limited fit between
company’s offerings and
customer’s needs; low
profit potential
Short-term
customers
Long-term
customers
Projected loyalty
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The Internet
• The Internet has been hailed as the
technology behind a New Economy.
• Marketing applications include:
– “Click-and-mortar” companies
– “Click-only” companies
– Business-to-business e-commerce
• Business-to-business transactions online
are expected to reach $4.3 trillion in 2005.
• By 2005, 500,000 companies will use the
Internet to do business.
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The New Digital Age
The recent technology
boom has had a major
impact on the ways
marketers connect
with and bring value
to their customers.
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New Marketing Landscape
Rapid Globalization
Not-for-Profit
Marketing
Ethics & Social
Responsibility
New World of Marketing
Relationships
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Rest Stop: Reviewing the Concepts
1. Define marketing and outline the steps in the
2.
3.
4.
5.
marketing process.
Explain the importance of understanding customers and
the marketplace, and identify the five core marketplace
concepts.
Identify the key elements of a customer-driven
marketing strategy and discuss marketing management
orientations that guide marketing strategy.
Discuss customer relationship management and
strategies for building lasting customer relationships.
Describe the major trends and forces that are changing
the marketing landscape in this new age of
relationships.
1-45