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Marketing: ManagingProfitable Customer

Relationships

A Global PerspectiveA Global Perspective

11

Philip KotlerPhilip KotlerGary ArmstrongGary ArmstrongSwee Hoon AngSwee Hoon Ang

Siew Meng LeongSiew Meng LeongChin Tiong TanChin Tiong Tan

Oliver Yau HonOliver Yau Hon--MingMing

PowerPoint slides adapted byPeggy Su

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1-2Copyright 2009 Pearson Education South Asia Pte Ltd

Learning Objectives

After studying this chapter, you should be able to:

1. Define marketing and outline the steps in the marketingprocess

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 marketingstrategy and discuss the marketing managementorientations that guide marketing strategy

4. Discuss customer relationship management, and identifystrategies for creating value for customers and capturingvalue from customers in return

5. Describe the major trends and forces that are changing themarketing landscape in this age of relationships

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ChapterConcepts

1. What Is Marketing?

2. Understanding the Marketplace and Customer Needs

3. Designing a Customer-Driven Marketing Strategy

4. Preparing an Integrated Marketing Plan and Program5. Building Customer Relationships

6. Capturing Value from Customers

7. The New Marketing Landscape

8. So, What Is Marketing? Pulling It All Together

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What Is Marketing?

Marketing Defined

Marketing is the process bywhich companies create value

for customers and build strongcustomer relationships tocapture value from customersin return.

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Marketing Process

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Create customer driven

marketing strategy

Construct a marketing

program that deliverssuperior value

Build profitable

relationships & createcustomer delight

Capture value from

customers to create profits

& customer quality

Understand the

marketplace and

customers needs/wants

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Understanding the Marketplace

andC

ustomer NeedsCustomer Needs, Wants, and Demands

Needs are states of deprivation:

Physicalfood, clothing, warmth, safety

Socialbelonging and affection

Individualknowledge and self-expression

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Customer Needs, Wants, and Demands

Wants are the form that needs take as theyare shaped by culture and individualpersonality.

Demands are wants backed bybuying power.


andC

ustomer Needs

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Market OfferingsProducts, Services, andExperiences

Market offerings are some combination ofproducts, services, information, orexperiences offered to a market to satisfy aneed or want.


andC

ustomer Needs

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Market OfferingsProducts, Services, andExperiences

Marketing myopia is focusing only onexisting wants and losing sight of underlyingconsumer needs.

Exchange is the act of obtaining a desired

object from someone by offering somethingin return.


andC

ustomer Needs

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Customer Value and Satisfaction

Expectations

Customers

Value and satisfaction

Marketers

Set the right level of expectations

Not too high or too low


andC

ustomer Needs

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Exchanges and Relationships

Exchange is the act of obtaining a desiredobject from someone by offering something in

return.

Relationships consist of actions to build andmaintain desirable relationships.


andC

ustomer Needs

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Markets are the set of actual and potentialbuyers of a product.

Marketing system consists of all of the actors

(suppliers, company, competitors,intermediaries, and end users) in the systemwho are affected by major environmentalforces.

Demographic

Economic

Physical


andC

ustomer Needs

Technological

Political-legal

Socio-cultural

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Designing a Customer-Driven

Marketing StrategyMarketing Management

Marketing management is the art andscience of choosing target markets andbuilding profitable relationships with them.

What customers will we serve?

How can we best serve these customers?

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Selecting Customers to Serve

Market segmentation: Dividing the

markets into segments of customers Target marketing: Which segments to

go after


Marketing Strategy

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MARKET SEGMENTATION

Advantages

Company Efficiency in Distribution and

Communication Customer Focus and Specialization

Competitive Pressure Reduction

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CHOICE OF SEGMENTATION

Market Size

Growth trend

Homogeneity

Responsiveness

Purchase Authority

Awareness Cost

Loyalty Level

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CASE STUDY 1:

JEANS MARKET SEGMENTATION

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JEANS MARKET SEGMENTATION

UTILITARIAN JEANS CUSTOMER (26%)

MAINSTREAM TRADITIONALIST (22%)

CLASSIC INDEPENDENTS (21%)

TRENDY / CASUAL (19%)

PRICE SHOPPER (12%)

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JEANS CONSUMER SEGMENT 1

UTILITARIAN JEANS CUSTOMER

The Levi Blue Jeans Loyalist

He wears jeans for work and play

He doesnt care much about style

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MAINSTREAM TRADITIONALIST

This man is older

He has quite a conservative taste in clothing

He likes to shop with his wife

He like to shop in department stores

He favors polyester fabrics

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CLASSIC / INDEPENDENT

Late 20s / early 30s

Clothes are really important to him

He spends more on clothes than any other group

He likes to shop alone

He likes to shop at specialty stores

He favors traditional styles

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Trendy / Casual Customer

Very Interested in high fashion

He likes to be noticed

He is usually younger

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PRICE SHOPPER

This is an older customer whose main goal is price

He shops department store sales and discount stores

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Marketing Management Orientations

The marketing concept is the idea

that achieving organizational goalsdepends on knowing the needs andwants of the target markets anddelivering the desired satisfactions

better than competitors do.


Marketing Strategy

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De-marketing

Marketing to reduce demand temporarilyor permanently

The aim is not to destroy demand but to

reduce or shift it.


Marketing Strategy

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Marketing management is:

Customer management

Demand management


Marketing Strategy

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Choosing a Value Proposition

The value proposition is the set of

benefits or values a company promisesto deliver to customers to satisfy theirneeds.


Marketing Strategy

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Production concept

Product concept

Selling concept

Marketing concept

Societal concept


Marketing Strategy

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Marketing ManagementOrientations

The production concept isthe idea that consumers willfavor products that areavailable or highly

affordable.


Marketing Strategy

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The product concept is the idea that

consumers will favor products that offerthe most quality, performance, andfeatures for which the organizationshould therefore devote its energy to

making continuous improvements.


Marketing Strategy

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The selling concept is the idea that

consumers will not buy enough of thefirms products unless it undertakes alarge scale selling and promotioneffort.


Marketing Strategy

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The societal marketing concept is

the idea that a company should makegood marketing decisions byconsidering consumers wants, thecompanys requirements, consumers

long-term interests, and societys long-run interests.


Marketing Strategy

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Preparing an Integrated

Marketing Plan and Program

Marketing Mix

The marketing mix is the set of tools

(four Ps) the firm uses to implement itsmarketing strategy:

Product

Price Promotion

Place

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ASPECTS OF THE MARKETING MIX

PRODUCT PRICE PLACE PROMOTION

Functionality

Appearance

Quality

Packaging

Brand

Warranty

Service/Support

List Price

Discounts

Allowances

Financing

LeasingOptions

ChannelMembers

ChannelMotivation

MarketCoverage

Locations

Logistics

ServiceLevels

Advertising

Personal

SellingPublicRelations

Message

MediaBudget

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MARKETING MIX WILKINS

4Ps WILKINS

PRODUCT DISTILLED WATER

DISPENSER 14,300.00

PLACE OWN FLEET

DIRECT SELLING

DOCTORS CAMPAIGN

PROMO FREE BOTTLE FORREFERRING NEWCUSTOMERS

PRICE 120 / 5 GALLON

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Integrated Marketing Program

An integrated marketing program is

a comprehensive plan thatcommunicates and delivers theintended value to chosen customers.

Preparing an Integrated

Marketing Plan and Program

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Customer Relationship Management(CRM)

Customer relationship management

is the overall process of building andmaintaining profitable customerrelationships by delivering superiorvalue and satisfaction.

Building Customer Relationships

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Customer Relationship Management (CRM)

Customer perceived value is the differencebetween total customer value and totalcustomer cost.

Customer satisfaction is the extent towhich a products perceived performancematches a buyers expectations.


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Customer Relationship Management (CRM)Customer Relationship Levels and Tools

Basic relationship

Full relationships Frequency marketing programs

Club marketing programs


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The Changing Nature ofCustomerRelationships

Relating with more carefully selected customersuses selective relationship management to target

fewer, more profitable customers.

Relating for the long term uses customer relationshipmanagement to retain current customers and buildprofitable, long-term relationships.

Relating directly uses direct marketing tools(telephone, mail order, kiosks, Internet) to makedirect connections with customers.


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Partner Relationship Management

Partner relationship management refersto working closely with partners in othercompany departments and outside thecompany to jointly bring greater value tocustomers.


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Partners inside the company is everyfunction area interacting with customers.

Electronically Cross-functional teams

Partners outside the company is howmarketers connect with their suppliers, channel

partners, and competitors by developingpartnerships.


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The supply chain is a channel thatstretches from raw materials to componentsto final products to final buyers.

Supply management

Strategic partners

Strategic alliances


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Creating Customer Loyalty and Retention

Customer lifetime value is the value of theentire stream of purchases that the customerwould make over a lifetime of patronage.

Capturing Value from Customers

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Growing Share ofCustomer

Share of customeris the portion of thecustomers purchasing that a company getsin its product categories.


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Building Customer Equity

Customer equity is the total combinedcustomer lifetime values of all of thecompanys customers.


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Building Customer Equity

Building the right relationships with theright customers involves treatingcustomers as assets that need to bemanaged and maximized.

Different types of customers require differentrelationship management strategies

Build the rightrelationship with the rightcustomers


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Major Developments

Digital age

Globalization

Ethics and social responsibility

Not-for-profit marketing

The New Marketing Landscape

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The New Digital Age Recent technology has had a major impact on the

ways marketers connect with and bring value to theircustomers

Market research

Learning about and tracking customers

Create new customized products

Distribution

Communication

Video conferencing

Online data services


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The New Digital Age

Internetcreates marketplacesand marketspaces

Information

Entertainment

Communication


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Rapid Globalization

The world is smaller.

Think globally, act locally.


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The Call for More Ethics and SocialResponsibility

Marketers are being called upon to takegreater responsibility for the social and

environmental impact of their actions in aglobal economy.


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The Call for More Ethics and SocialResponsibility

Social marketing campaigns encourageenergy conservation and concern for the

environment or discourage smoking,excessive drinking, and drug use.


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1 55C i ht 2009 P Ed ti S th A i Pt Ltd

The Growth for Not-for-Profit Marketing

Colleges

Hospitals

Museums

Zoos

Orchestras

Religious groups


Documents

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