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Marketing:Marketing:
Managing Profitable Managing Profitable Customer RelationshipsCustomer Relationships
1
1-2
ROAD MAP: Previewing the Concepts
• Define marketing and outline the steps in the Define marketing and outline the steps in the marketing process.marketing process.
• Explain the importance of understanding Explain the importance of understanding customers and the marketplace, and identify the customers and the marketplace, and identify the five core marketplace concepts.five core marketplace concepts.
• Identify the key elements of a customer-driven Identify the key elements of a customer-driven marketing strategy and discuss the marketing marketing strategy and discuss the marketing management orientations that guide marketing management orientations that guide marketing strategy.strategy.
• Discuss customer relationship management and Discuss customer relationship management and strategies for building lasting customer strategies for building lasting customer relationships.relationships.
• Describe the major trends and forces that are Describe the major trends and forces that are changing the marketing landscape in this new age changing the marketing landscape in this new age of relationships.of relationships.
1-3
What Is Marketing?
• Simple Definition: Marketing is Simple Definition: Marketing is managing profitable customer managing profitable customer relationships.relationships.
Goals: Goals: 1.1. Attract new customers by Attract new customers by
promising superior value. promising superior value. 2.2. Keep and grow current Keep and grow current
customers by delivering customers by delivering satisfaction.satisfaction.
1-4
Marketing Old vs. New
Old view of marketing:Old view of marketing:
Making a sale Making a sale ---- “Telling and Selling” “Telling and Selling”
New view of marketing:New view of marketing:
Satisfying customer needsSatisfying customer needs
1-5
Marketing Defined
A social and managerial A social and managerial process by which process by which
individuals and groups individuals and groups obtain what they need and obtain what they need and want through creating and want through creating and exchanging products and exchanging products and
value with others.value with others.
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A Simple Model of the Marketing Process
Understand the marketplace
and customer needs and
wants
Understand the marketplace
and customer needs and
wants
Capture value from customers to create profits and customer equity
Capture value from customers to create profits and customer equity
Create value for customers and build customer
relationships
Capture value from customers
in return
Design a customer-driven
marketingstrategy
Design a customer-driven
marketingstrategy
Build profitable relationships and
createcustomer delight
Build profitable relationships and
createcustomer delight
Construct a marketing program
that delivers superior value
Construct a marketing program
that delivers superior value
What are Consumers’ Needs, Wants, and
Demands?
1-8
This Is a Need
NeedsNeeds - state of - state of felt deprivation felt deprivation including including physical, social, physical, social, and individual and individual needs.needs.
1-9
Types of Needs
• Physical:Physical:– Food, clothing, shelter, safetyFood, clothing, shelter, safety
• Social:Social:– Belonging, affectionBelonging, affection
• Individual:Individual:– Learning, knowledge, self-expressionLearning, knowledge, self-expression
1-10
This Is a Want
WantsWants - form - form that a human that a human need takes, as need takes, as shaped by shaped by culture and culture and individual individual personality.personality.
1-11
This Is Demand
“Demand”
Wants Buying Power
1-12
Need / Want Fulfillment
• Needs and Wants Needs and Wants Fulfilled through a Fulfilled through a Marketing Offer Marketing Offer ::– Some combination of Some combination of
products, services, products, services, information, or information, or experiences offered experiences offered to a market to satisfy to a market to satisfy a need or want.a need or want.
1-13
ProductsAnything that can be Offered to a Market to Satisfy a Need or Want
ProductsAnything that can be Offered to a Market to Satisfy a Need or Want
PersonsPersons PlacesPlaces OrganizationsOrganizations
IdeasIdeasInformationInformation
What Satisfies Consumers’ Needs and Wants?
ServicesActivity or Benefit Offered for Sale That is Essentially
Intangible and Does Not Result in the Ownership of Anything
ServicesActivity or Benefit Offered for Sale That is Essentially
Intangible and Does Not Result in the Ownership of Anything
1-14
Product as an Idea
Products do not have to be physical objects. Here the “product” is an idea—protecting animals.
1-15
Marketing Myopia
• Sellers pay more Sellers pay more attention to the attention to the specific products they specific products they offer than to the offer than to the benefits and benefits and experiences produced experiences produced by the products.by the products.
• They focus on the They focus on the “wants” and lose sight “wants” and lose sight of the “needs.”of the “needs.”
1-16
Value and Satisfaction
Expectation
Performance810
If performance is lower than expectations, satisfaction is low.
If performance is higher than expectations, satisfaction is high.
Expectation
Performance
108
1-17
Exchange vs. Transaction
• Exchange:Exchange:– Act of obtaining a desired object from Act of obtaining a desired object from
someone by offering something in someone by offering something in return.return.
• Transaction:Transaction:– A trade of values between two parties.A trade of values between two parties.– One party gives X to another party and One party gives X to another party and
gets Y in return. Can include cash, gets Y in return. Can include cash, credit, check, or barter.credit, check, or barter.
1-18
What is a Market?
• The set of actual The set of actual and potential and potential buyers of a product.buyers of a product.
• These people share These people share a need or want that a need or want that can be satisfied can be satisfied through exchange through exchange relationships.relationships.
1-19
Elements of a Modern Marketing System
1-20
Marketing Management
• The art and science of choosing target The art and science of choosing target markets and building profitable markets and building profitable relationships with them.relationships with them.
Questions to ask:Questions to ask:
1.1. What customers will we serve?What customers will we serve?What is our target market?What is our target market?
2.2. How can we best serve these How can we best serve these customers?customers?
What is our value proposition?What is our value proposition?
1-21
Segmentation and Target Marketing
Market Segmentation:
Divide the market into segments of customers
Target Marketing:
Select the segment to cultivate
#1 #2
1-22
•Pair up with another student and Pair up with another student and share your thoughts with one share your thoughts with one another on the following items:another on the following items:– To what market segments do you think To what market segments do you think
you belong?you belong?– What personal traits, variables, or What personal traits, variables, or
factors characterize you as belonging to factors characterize you as belonging to those segments?those segments?
Interactive Student Assignment
1-23
Marketing Management
Finding and increasing Finding and increasing demand, also changing or demand, also changing or reducing demand, such as reducing demand, such as in demarketing.in demarketing.
DemandDemandManagementManagement
Temporarily or Temporarily or permanently reducing the permanently reducing the number of customers or number of customers or shifting their demand.shifting their demand.
DemarketingDemarketing
1-24
Value Proposition
• The set of benefits The set of benefits or values a or values a company promises company promises to deliver to to deliver to consumers to consumers to satisfy their needs.satisfy their needs. It cleans and freshens
like sunshine!
www.gainlaundry.com
1-25
Marketing Management Philosophies
Production ConceptProduction Concept
Product ConceptProduct Concept
Selling ConceptSelling Concept
Marketing ConceptMarketing Concept
Societal Marketing ConceptSocietal Marketing Concept
1-26
Marketing and Sales Concepts Contrasted
1-27
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.
1-28
Societal Marketing Concept
1-29
•Pair up with another student and Pair up with another student and share your thoughts with one share your thoughts with one another on the following topic:another on the following topic:– Based on your personal experience, Based on your personal experience,
discuss with your partner ways you discuss with your partner ways you have seen organizations implement the have seen organizations implement the societal marketing concept.societal marketing concept.
Interactive Student Assignment
1-30
The Marketing Mix
CustomerCustomerNeedsNeeds
ProductProduct PricePrice
PromotionPromotion DistributionDistribution
1-31
Customer Relationship Management
• The process of The process of building and building and maintaining maintaining profitable profitable customer customer relationships by relationships by delivering delivering superior superior customer value customer value and satisfaction.and satisfaction.
1-32
Customer Perceived Value
• Customer’s Customer’s evaluation of the evaluation of the difference between difference between all the benefits and all the benefits and all the costs of a all the costs of a marketing offer marketing offer relative to those of relative to those of competing offers.competing offers.
1-33
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.”
1-34
Customer Satisfaction
• Dependent on the Dependent on the product’s product’s perceived perceived performance performance relative to a relative to a buyer’s buyer’s expectations.expectations.
1-35
Customer Relationship Levels
Basic Relationship
Full Partnershi
p
Continuum
1-36
Loyalty and Retention
Financial Benefits
Social Benefits
Structural Ties
1-37
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
1-38
• Customer Lifetime ValueCustomer Lifetime Value– The entire stream of The entire stream of
purchases that the customer purchases that the customer would make over a lifetime of would make over a lifetime of patronage.patronage.
• Share of CustomerShare of Customer– The share a company The share a company
gets of the customers gets of the customers purchasing in their purchasing in their product categories.product categories.
Customer Loyalty & Retention
1-39
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.
1-40
Customer Equity
•Customer equity Customer equity is the total is the total combined combined customer customer lifetime values lifetime values of all the of all the company’s company’s customers.customers.
1-41
Customer Relationship Groups
Projected loyalty
High
Profitability
Low
Long-term customers
Short-term customers
Good fit between company’s offerings and customer’s needs; high
profit potential
Limited fit between company’s offerings and customer’s needs; low
profit potential
Little fit between company’s offerings and customer’s
needs; lowest profit potential
Good fit between company’s offerings and
customer’s needs; highest profit potential
Strangers
Butterflies True Friends
Barnacles
1-42
The Internet
• The The InternetInternet has been hailed as the has been hailed as the technology behind a New Economy.technology behind a New Economy.
• Marketing applications include:Marketing applications include:– ““Click-and-mortar” companiesClick-and-mortar” companies– ““Click-only” companiesClick-only” companies– Business-to-business e-commerceBusiness-to-business e-commerce
• Business-to-business transactions Business-to-business transactions online are expected to reach $4.3 online are expected to reach $4.3 trillion in 2005.trillion in 2005.
• By 2005, 500,000 companies will use By 2005, 500,000 companies will use the Internet to do business.the Internet to do business.
1-43
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.
1-44
New Marketing Landscape
Rapid Globalization
Ethics & SocialResponsibility
New World of MarketingRelationships
Not-for-ProfitMarketing
1-45
Rest Stop: Reviewing the Concepts
1.1. Define marketing and outline the steps in the Define marketing and outline the steps in the marketing process.marketing process.
2.2. Explain the importance of understanding customers Explain the importance of understanding customers and the marketplace, and identify the five core and the marketplace, and identify the five core marketplace concepts.marketplace concepts.
3.3. Identify the key elements of a customer-driven Identify the key elements of a customer-driven marketing strategy and discuss marketing marketing strategy and discuss marketing management orientations that guide marketing management orientations that guide marketing strategy.strategy.
4.4. Discuss customer relationship management and Discuss customer relationship management and strategies for building lasting customer strategies for building lasting customer relationships.relationships.
5.5. Describe the major trends and forces that are Describe the major trends and forces that are changing the marketing landscape in this new age changing the marketing landscape in this new age of relationships.of relationships.