CHAPTER 1
Developing
Customer
Relationships
and Value
through
Marketing
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
1-1
After reading this chapter you
should be able to:
•
Define marketing and explain the importance
of:
• discovering and
• satisfying consumer needs and wants.
•
Distinguish between marketing mix elements
and environmental factors.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
1-2
After reading this chapter you
should be able to:
•
Describe how organisations build strong
customer relationships using current thinking
about customer value and relationship
marketing.
•
Explain the meaning of ethics and social
responsibility and how they relate to the
individual, organisations, and society.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
1-3
What is Marketing?
• Marketing: Using Exchanges to Satisfy Needs
• What you need to remember here is that
marketing is about exchanges.
• As consumers you undertake exchanges every
day of the week.
• What you will learn in this course is the diverse
factors that influence that exchange between you
as a consumer and the organisation you are
buying the product from.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
1-4
Some of the factors that affect
marketing.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
1-5
Concept Check
•
As we go through the text don’t forget to use the
concept checks to ensure that you are
understanding the major concepts for each chapter.
1. What is marketing?
•
Marketing is the process of developing, pricing, promoting, and
distributing goods, services, and ideas to satisfy the needs of
consumers.
2. Marketing focuses on ______ and ______ consumer
needs.
•
•
Discovering and satisfying
So how did you go? Any questions?
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
1-6
How Marketing Discovers and Satisfies
Consumer Needs
• Discovering consumer needs is about…
– The challenge of launching winning products
– And understanding it’s about the consumer needs and
wants, not the product!
• Discovering consumer needs though isn’t easy. If it
was we would all be happy consumers but we aren’t
are we?
• Being successful in marketing also means having a
customer orientation, not a profit orientation.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
1-7
Needs and Wants
• So what exactly are needs and wants? Why are they
so important to marketers?
• A need occurs when a person feels physiologically
deprived of basic necessities such as food, clothing
and shelter.
• A want is a felt need that is shaped by a person’s
knowledge, culture and personality.
– For example, we may have a need for food, but our
knowledge, culture and personality may mean that we want a
hamburger.
• It is up to us as marketers to inform consumers how
our products can satisfy their needs and wants.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
1-8
Evolution of the Marketing Orientation
• Satisfying consumer needs and wants though wasn’t
the aim of many organisations as it has been only
recently that the marketing orientation has emerged.
• Up until the 1960’s consumers had to buy whatever
product they were sold by companies, and the art of
the selling was more important than meeting
customer needs.
• In the 1960’s the marketing concept began to
emerge, which was the idea that an organisation
should be trying to satisfy the needs of consumers
while also trying to achieve the organisation’s goals.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
1-9
Market Orientation and Market
• From the 1960’s onwards the era of the market
orientation emerged.
• Market orientation is about focusing the
organisational efforts on collecting and using
information about customers’ needs to create
customer value.
• Market orientation has led to marketing concepts like
customer relationship management (CRM).
• But haven’t we missed something? What a market
is? Let’s find out…
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
1-10
Market
• A market consists of people with both the desire and
the ability to buy a specific product.
• In other words people who want to exchange a thing
of value, usually money, for a thing of value from the
organisation, which is a product or service.
• Therefore markets ultimately are made up of people.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
1 - 11
Target Markets
• As it would not be viable to target the entire market or
every market, we target only some markets.
• A target market is therefore a specific group of
potential consumers towards which an organisation
directs the marketing program.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
1-12
Satisfaction and Customer Loyalty
• Customer satisfaction and customer loyalty are terms
you’ll hear discussed a lot in business.
• An unhappy customer can be your worst enemy in
marketing – one Australian food marketer found that
an unhappy customer might tell up to 28 people
about their experience!
• A satisfied customer though is a loyal customer.
• Keeping a customer loyal is smart business – a loyal
customer will often purchase more frequently and
spend more when they do so.
• Keep the importance of these concepts in mind as we
work through the course.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
1-13
The Four P’s: Controllable Marketing
Mix Factors
•
•
•
Now you’ve learnt about the importance of customer
satisfaction and customer loyalty, how does an organisation
use marketing to achieve these things?
A company develops a marketing plan for each of its products
that will ensure that its products will meet the needs and wants
of its customers, which of course leads to satisfied and loyal
customers.
The company uses a combination of four marketing functions,
or the 4 P’s, to do this:
•
•
•
•
•
Product - a good, service or idea to satisfy the consumer’s needs
Price – What is exchanged for the product
Promotion – a means of communication between the seller and buyer
Place – a means of getting the product to the consumer
These are called the controllable marketing mix factors
because the marketer controls these factors.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
1-14
Don’t Forget!
•
•
•
The 4 P’s are critical to know
and understand for this
course.
You should never forget the
4 P’s in this course.
They are:
1. Product - a good, service
or idea to satisfy the
consumer’s needs
2. Price – What is
exchanged for the product
3. Promotion – a means of
communication between
the seller and buyer
4. Place – a means of getting
the product to the
consumer
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
1-15
Uncontrollable Factors
• The 4 P’s, which we’ll go over in much more depth
during the course, are the factors that we can control
in marketing.
• However there are factors outside our control that we
can’t.
• These factors are:
–
–
–
–
Social
Economic
Technological
Competitive and Regulatory forces
• As a marketer you need to be aware of what
influence these factors will have on your marketing
program before, during and after you implement it.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
1-16
The Marketing Program: Developing
Loyal Customers
• As customers we are always seeking value in the
products we buy and consume.
• Companies have realised this want in consumers and
many companies now seek to offer the best customer
value that they can.
• What is customer value?
• Customer value is the unique combination of benefits
received by targeted buyers that includes quality, price,
convenience, on-time delivery and before and after sales
service.
• Companies offer customer value by either a combination
of these methods or only one, it all depends upon how
the consumer perceives value for that product.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
1-17
The Marketing Program: Relationship
Marketing
• A firm achieves meaningful customer relationships by creating
and maintaining connections with its customers through careful
co-ordination of the 4 P’s.
• Relationship marketing is the process by which the
organisations is linked to its individual customers, employees,
suppliers and other partners for their mutual long-term benefit.
• Relationship marketing relies upon a personal, ongoing
relationship between the organisation and its individual
customers that begins before and continues after the sale.
• This means that some products never establish a close
relationship with their customers, whereas some do so very
easily.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
1-18
How does Lexus do Relationship
Marketing
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
1-19
Concept Check
1. An organisation can’t satisfy the needs of all
consumers, so it must focus on one or more
subgroups, which are its____________
2. What are the four marketing mix elements that make
up the organisation’s marketing program?
3. What are uncontrollable variables?
1. Target markets
2. Product, price, place and promotion.
3. Environmental factors the organisation’s marketing
department can’t control. These include social,
economic, technological, competitive, and regulatory
forces.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
1-20
Ethics and Social Responsibility:
Balancing Interests
• Many claim that marketing is the most influential business theory
in the business world.
• The drive to be seen as the company that can offer the best
consumer value has made many companies act unethically and
with little social responsibility. But are these concepts important?
• Ethics is increasingly becoming important to consumers, and
therefore also to companies. Many companies now actively
promote their ethical standards as much as their product quality.
• Social responsibility, that is a company’s responsibility to
society, has also become important. Many companies are proud
of the fact that they try to minimise their impact on society as a
whole.
• This has led to the societal marketing concept. This is the view
that organizations should satisfy the needs of consumers in a
way that provides for society’s wellbeing.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
1-21
The Breadth and Depth of Marketing
•
•
Marketing affects every person and organisation in
the world in some way.
To understand how this happens, we need to
analyse:
1) who markets,
2) what they market,
3) who buys and uses what is marketed,
4) who benefits from those activities,
5) How they benefit.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
1-22
Breadth and Depth of Marketing
• Who markets? Nearly every organisation undertakes marketing
activities, and more of them are increasing their marketing
efforts. Marketing will only increase in the future.
• What is marketed? Nearly anything can be marketed. From
products, to services to even ideas such as healthy eating or
anti drink driving.
• Who buys and uses what is marketed? All of us are consumers.
Everyday we consume many products, and our lives are now
built on consuming those products.
• Who benefits? All of us. From a better standard of living and
increased competition in markets, through to improved products
to employment in companies that use marketing to grow.
• How do consumers benefit? Consumers benefit from increased
utility in form, place, time and possession.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
1-23
Concept Check
1. What are the two key characteristics of the
marketing concept?
An organisation should:
(1) strive to satisfy the needs of consumers;
(2) while also trying to achieve the organisation’s
goals.
2. What is the difference between goods and services?
Goods are physical objects, such as iron ore,
apples, a computer, or an airplane. Services include
things as diverse as legal advise, a college
education or air travel.
1
Copyright  2008 McGraw-Hill Australia Pty Ltd
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PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
4
Finish
• Questions?
• Next: Linking Marketing and Corporate Strategies.
Copyright  2008 McGraw-Hill Australia Pty Ltd
PPTs t/a Marketing: The Core by Kerin et al
Slides prepared by Andrew Hughes, Australian National University
1-25