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CHAPTER-12

BUILDING CUSTOMER RELATIONSHIPS THROUGH EFFECTIVE MARKETING

Dr. Gehan Shanmuganathan, (DBA)

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APPLE RINGS UP $ 43 BILLION IN ANNUAL REVENUE, SELLING 10 MILLION MACINTOSH COMPUTERS, 8 MILLION IPODS, AND 20 MILLION IPHONES EVERY YEAR

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LEARNING OBJECTIVES

LEARNING OBJECTIVES1. Understand the meaning of marketing and the

importance of management of customer relationships.

2. Explain how marketing adds value by creating several forms of utility.

3. Trace the development of the marketing concept and understand how it is implemented.

4. Understand what markets are and how they are classified.

5. Identify the four elements of the marketing mix and be aware of their importance in developing a marketing strategy.

LEARNING OBJECTIVES (CONT’D)6. Explain how the marketing environment affects

strategic market planning.7. Understand the major components of a marketing

plan.8. Describe how market measurement and sales

forecasting are used.9. Distinguish between a marketing information system

and marketing research.10. Identify the major steps in the consumer buying

decision process and the sets of factors that may influence this process.

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WHAT IS MARKETING?

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

MARKETING

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MANAGING CUSTOMER RELATIONSHIPS

MANAGING CUSTOMER RELATIONSHIPS Relationship marketing- establishing long-term,

mutually satisfying buyer-seller relationships

Customer relationship management (CRM)- using information about customers to create

marketing strategies that develop and sustain

desirable customer relationship

Customer lifetime value- measure of a

customer’s worth (sales minus costs) to business

over one’s life time

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UTILITY: THE VALUE ADDED BY MARKETING

Utility- the ability of a good or service to satisfy a

human need

Form utility- utility created by converting production

inputs into finished products

Place utility- utility created by making product available

at a location convenient for customer to purchase

Time utility- utility created by making a product

available when customers wish to purchase it

Possession utility- utility created by transferring title

(ownership) of a product to a buyer

UTILITY: THE VALUE ADDED BY MARKETING

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THE MARKETING CONCEPT

THE MARKETING CONCEPT A business philosophy that firm should provide goods

and services that satisfy customer’s needs through a coordinated set of activities that allow the firm to achieve its objectives

To achieve success, a business must Talk to its potential customers to assess their

needs Develop a good or service to satisfy those needs Continue to seek ways to provide customer

satisfaction

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EVOLUTION OF MARKETING CONCEPT AFTER INDUSTRIAL REVOLUTION

PRODUCTION CONCEPT“ The production concept holds that consumers

will favour those products that are widely available and low in cost. Managers of production oriented organisations concentrate on achieving high production efficiency and wide distribution coverage”.

Companies that follow this concept is called production oriented

PRODUCT CONCEPT

“The product concept contends that consumers will favour those products that offer the most quality, performance or innovative features. Managers in these product oriented organisations focus their energy on making superior products and improving them over time.”

A company following this concept is called “Myopic”

SELLING CONCEPT “The selling concept holds that consumers, if left

alone, will ordinarily not buy enough of the organisations products. The organisation must therefore undertake an aggressive selling and promotional effort.”

A company following this concept is called sales oriented

MARKETING CONCEPT

The marketing concept rests on four pillars Target market – This is where the marketing effort is directed

towards a chosen market sector.

Customer needs - The marketing activities start with the customers needs in mind.

Coordinated marketing – This is where a coordinated effort is put in meeting the requirements of the customers across various functions of the organisation.

Profitability – The ultimate outcome would be profits for a business organisation or an excess in terms of effort for non profit

organisations.

SOCIETAL MARKETING CONCEPT

Societal Marketing is a management process responsible for identifying, anticipating and satisfying customer requirements at a profit in a socially acceptable manner.  

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IMPLEMENTING THE MARKETING CONCEPT

IMPLEMENTING THE MARKETING CONCEPT

Obtain information about present and potential customers Their needs; how well those needs are being satisfied;

how products might be improved; customer opinions about the firm

Pinpoint specific needs and potential customers toward which to direct marketing activities and resources

IMPLEMENTING THE MARKETING CONCEPT (CONT’D)

Mobilize marketing resources to Provide a product that will satisfy customers Price the product at an acceptable and profitable

level Promote the product to potential customers Ensure distribution for product availability when

and where wanted Obtain information on the effectiveness of the

marketing effort and modify efforts as necessary

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MARKETS AND THEIR CLASSIFICATION

MARKETS AND THEIR CLASSIFICATION

Market- group of individuals or organizations,

or both, that need products in a given

category and that have the ability,

willingness, and authority to purchase such

products

Consumer markets (B to C) Business-to-business (industrial- B to B)

markets

DEVELOPING MARKETING STRATEGIES

Marketing strategyConsists of

The selection and analysis of a target marketThe creation and maintenance of an appropriate marketing mix (a combination of product, price, distribution, and promotion developed to satisfy a particular target market)

DEVELOPING MARKETING STRATEGIES (CONT’D)

Target market selection and evaluationTarget market- a group of individuals or

organizations for which the firm develops and maintains a marketing mix suitable for the specific needs and preferences of that group

Market segment- a group of individuals or organizations within a market that share one more common characteristics

Market segmentation- the process of dividing a market into segments

One Marketing Mix Seg 1Seg 2Seg 3

Marketing Mix 1 Seg 1Seg 2Seg 3 Marketing Mix 2

Marketing Mix 3

One Marketing Mix Seg 1

Undifferentiating

Differentiating

Concentrated

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MARKETING ENVIRONMENT

DEFINITION OF MARKETING ENVIRONMENT

A company’s marketing environment consists of the actors and forces external to the marketing management function of the firm that impinge on the marketing

management’s ability to develop and maintain successful transaction with its target customers.

- Kotler : 2001:42 -  

Marketing Environment

Internal Environment

External Environment

Micro Environment

Macro Environment

Customers, Distributors, Suppliers & Competitors

PESTEEL Factors

5 M’s 7 S’s

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DEVELOPING A MARKETING PLAN

DEVELOPING A MARKETING PLAN A written document that specifies an organization’s resources,

objectives, strategy, and implementation and control efforts to be used in marketing a specific product or product group

Elements of a marketing plan Executive summary Environmental analysis Strengths and weaknesses Opportunities and threats Marketing objectives Marketing strategies Marketing implementation Evaluation and control

MARKET MEASUREMENT AND SALES FORECASTING

Sales forecast- an estimate of the amount of

a product that an organization expects to sell

during a certain period of time based on a

specific level of marketing effort

Importance of measuring sales potential

MARKETING INFORMATION Marketing information system- a system for

managing marketing information that is gathered

continually from internal and external sources

Internal data sources

External data sources

Outputs

MARKETING INFORMATION (CONT’D)

The six steps of marketing research1. Define the problem2. Make a preliminary investigation3. Plan the research4. Gather factual information5. Interpret the information6. Reach a conclusion

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BUYING BEHAVIOR

TYPES OF BUYING BEHAVIOR Buying behavior- the decisions and actions of

people involved in buying and using products

Consumer buying behavior- the purchasing of

products for personal or household use, not

for business purposes

Business buying behavior- the purchasing of

products by producers, resellers,

governmental units, and institutions

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BUYING PROCESS Need Recognition

Identification of Alternatives

Evaluation of Alternatives

Purchase Decision

Post Purchase Evaluation

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WRITE FIVE KEY THINGS (AREAS) THAT YOU CAN CRITICALLY REMEMBER IN TODAY’S DISCUSSION

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WHAT WE DISCUSSED TODAY..

WHAT WE DISCUSSED TODAY..1. Understand the meaning of marketing and the

importance of management of customer relationships.

2. Explain how marketing adds value by creating several forms of utility.

3. Trace the development of the marketing concept and understand how it is implemented.

4. Understand what markets are and how they are classified.

5. Identify the four elements of the marketing mix and be aware of their importance in developing a marketing strategy.

WHAT WE DISCUSSED TODAY.. (CONT’D)6. Explain how the marketing environment affects

strategic market planning.7. Understand the major components of a marketing

plan.8. Describe how market measurement and sales

forecasting are used.9. Distinguish between a marketing information system

and marketing research.10. Identify the major steps in the consumer buying

decision process and the sets of factors that may influence this process.