Copyright © 2007 Pearson Education Canada 1-1 Marketing: An Introduction Second Canadian Edition Armstrong, Kotler, Cunningham, Mitchell and Buchwitz Chapter

1-1 Copyright © 2007 Pearson Education Canada

Marketing: An Introduction Second Canadian Edition

Armstrong, Kotler, Cunningham, Mitchell and Buchwitz

Chapter OneMarketing: Managing Profitable

Customer Relationships


Looking Ahead• Define marketing and the marketing processes.• Explain the importance of understanding

customers and the marketplace.• Identify the five core marketplace concepts.• Identify the key elements of a customer-driven

marketing strategy.• Discuss customer relationship management

and ways of creating and obtaining value.• Describe the major trends and forces changing

today’s marketing landscape.


What is Marketing?

• Attracting new customers by promising and delivering superior value.

• Building long-term relationships with customers by delivering continued customer satisfaction.

• Creating, building and managing these relationships profitably over time.


The Marketing Process• Understand the marketplace and customer

needs and wants.• Design a customer-driven marketing strategy.• Construct a marketing program that delivers

superior value.• Build profitable relationships and create

customer delight.• Capture value from customers to create

profits and customer equity.


Needs, Wants and Demands

• Needs are states of felt deprivation.

– Physical:• Food, clothing, shelter, safety.

– Social:• Belonging, affection.

– Individual:• Learning, knowledge, self-expression.


Needs, Wants and Demands

• Wants are needs shaped by culture and individual personality.– Jeans vs a sari.– Individual expression vs. collective good.

• Demands are wants combined with buying power.– Hilfiger vs. Giant Tiger.– Jetta vs. Jaguar.


Fulfilling Needs and Wants

• Marketers create marketing offers in response.– A combination of goods, services,

information or experiences offered to a market to satisfy a need or want.


Products, Services, Experiences• Products.

– Anything that can be offered for.– Acquisition, attention, use or consumption.– That might satisfy a need or want.

• Services.– Activities or benefits offered.– Essentially intangible.– Do not result in ownership of anything.

• Experiences. – Create, stage and market brand experiences.– Attending live theatre, music concert.


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.”– The great railroads lost out to the exploding trucking

industry.– They forgot that their business was solving

transportation problems, not running railroads.


Value and Satisfaction• If the performance and the customer’s

experience is lower than expectations, than customer satisfaction is low.

• If the performance and the customer’s experience meets expectations, than the customer is satisfied.

• If the performance and the customer’s experience exceeds expectations, than the customer is delighted.


Exchange and Transactions• Exchange.

– The act of obtaining a desired object from someone by offering something in return.

• Transaction. – A trade between two parties that involves:

• two things of value.• agreed upon conditions.• time of agreement.• place of agreement.


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.


Core Marketplace Concepts• Customers have needs, wants and

demands.• Marketers offer products or services.• Customers seek value and satisfaction

from offers.• Demands and offers result in

transactions and relationships.• Markets are all potential customers with a

similar demand.


Customer-Driven Marketing

• Divide markets into segments.

• Choose the right segment to target.

• Offer a unique value proposition.

• Differentiate your offer from competitor offers.

• Build customer value and satisfaction.

• Nurture long-term customer relationships.


Marketing Management

The art and science of choosing target markets and building profitable

relationships with them.


Segmentation and Targeting

• Segmentation divides the market into groups of customers with varying needs and wants.

• Targeting selects the right segment to nurture.


Demand Management

• Marketing management seeks to control demand.– Increasing demand is the norm.– Demarketing seeks to reduce demand in

certain circumstances.


Value Proposition

The set of benefits or values the company promises to deliver to its target markets

to satisfy their needs.


Marketing Concepts

• Production – affordability and availability.

• Product -- quality and innovation.

• Selling -- promotion and hard selling.

• Marketing -- customer satisfaction and relationships.

• Societal – long-term value to both customer and society.


The Selling Concepts• The production concept.

– Consumers will favour products that are available and highly affordable.

• The product concept.– Consumers favour products that offer the most

in quality, performance and innovative features.

• The selling concept.– Consumers will not buy unless it undertakes a

large-scale selling and promotional effort.


The Marketing Concepts

• The marketing concept. – Determining the needs and wants of target

markets and delivering the desired satisfactions more effectively and efficiently then the competitors.

– An “outside-in” perspective.– Customers are the paths to sales and

profits.– See next slide for a comparison.


The Marketing Concepts

• The societal marketing concept. – Generating customer satisfaction and long-

run societal well-being are the keys to both achieving the company’s goals and fulfilling its responsibilities.

– Balances human welfare, company profits and consumer satisfaction.

– Addresses broader social issues.


Relationship Marketing

• Customer relationship management.

The process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.


The Customer’s Experience

• Customer perceived value.– Customer’s subjective view of the offer’s value

compared to competitive offers.

• Customer satisfaction.– Customer’s subjective view of the value received in

return for the purchase price.

• Customer delight.– Customer’s subjective view of the increased

value received above the purchase price.


Building Relationships

• Relationships span from the basic to tight integrated relationships.

• Successful relationships are built on: – Financial benefits.– Social benefits.– Structural ties.


Partner Relationship Marketing• Working with partners in other company

departments and outside the company to jointly bring greater value to the customers.– Every department in an organization

contributes to customer satisfaction.– Suppliers are carefully controlled through

supply chain management.– Strategic alliances create new opportunities

to delight customers.


Capturing Value In Return• Customer lifetime value.

– The value of the entire stream of purchases that the customer would make over a lifetime of patronage.


Capturing Value In Return• Share of customer.

– Share of customer is the percentage of customers that buy a company’s product of all customers purchasing in that product category.

– Companies continuously strive to grow their share of customer.

– Creating brand extensions is a favoured method of growing share of customer.


Building Customer Equity

• The total combined customer lifetime value of all of the company’s customers.

• Often a more accurate measure of a company’s value than sales or market share.

• Combination of market share, share of customer and lifetime customer value.


Customer Relationship Groups

• Targeting the right customers at the right time.– Butterflies have high profitability with low loyalty.– True Friends have high profitability with high loyalty.– Strangers have low profitability with low loyalty.– Barnacles have low profitability with high loyalty.

• Challenge: make the Butterflies more loyal and make the Barnacle more profitable.

• Keep the True Friends and “fire” the Strangers.


New Marketing Technologies

• Technology has changed how marketers build value.– Internet and e-commerce/e-business.– Fast and global communications.– Wireless technologies.– Relational databases.

• Instant, highly targeted communication with customers and suppliers.


New Global Markets

• International trade is the new frontier.

• Export is critical to Canada’s economic growth.

• Difficult decision:– Delay means risking loss of growing global

markets.– Proceed means high risk but potentially high

reward.


Ethics and Responsibility

• Worldwide consumerism and environmentalism movements exert. pressure for greater responsibility

• Notion of “caring capitalism” tied to societal marketing concepts.– Seeking ways to make a profit by serving the

best long-run interests of customers and communities.


Not-For-Profit Marketing

• Marketing of ideas, values and institutions.

• Increasing awareness that these organizations must build relationships with constituents and stakeholders.

• Challenge of using new marketing techniques for not-for-profit initiatives.


Looking Back• Define marketing and the marketing processes.• Explain the importance of understanding

customers and the marketplace.• Identify the five core marketplace concepts.• Identify the key elements of a customer-driven

marketing strategy.• Discuss customer relationship management

and ways of creating and obtaining value.• Describe the major trends and forces changing

today’s marketing landscape.

Documents

Copyright © 2007 Pearson Education Canada 1-1 Marketing: An Introduction Second Canadian Edition Armstrong, Kotler, Cunningham, Mitchell and Buchwitz Chapter