Introduction to Marketing & Some Key ConceptsSession 1

What is Marketing?Marketing is managing profitable customer relationships by Attracting new customers Retaining and growing current customers Reclaiming lost customers

Marketing is NOT synonymous with sales or advertising

Kotlers definition:A process by which companies create value for customers and build strong relationships to capture value from customers in return.

A simple Model of Marketing Process:

Selling vs. Marketing

Needs (feeling), wants (form), and demands (backed by buying power)

Marketing offers goods, services and experiences to satisfy

Many Things Can Be Marketed!GoodsServicesExperiencesEventsPersons

Customer Value and satisfaction (as per expectation)

Exchange and relationships

Markets (a set of actual buyer-seller)Understanding marketplace, and customer needs & wants: Core Marketing ConceptsPlacesPropertiesOrganizationsInformationIdeas

Markets to ConcentrateCustomer MarketsReferral MarketsInfluence MarketsSupplier Markets Internal Markets

Designing a customer-driven marketing strategy: Marketing ManagementThe art and science of choosing target markets and building profitable relationships with them.

Selecting customers to serve

Choosing a value proposition to deliver

Management Orientations (Concepts)The Production Concept: widely available products with low costs.The Product Concept: Quality, performance and innovative products.The Selling Concept: Aggressive selling & promotion effortThe Marketing Concept: Determining needs & wants of target market, delivering desired satisfaction more effectively & efficiently than competitorsThe Societal Concept: Enhancing consumers & societys well-being

Preparing A Marketing Plan & Program

Building Customer Relationship

The development and maintenance of long-term, cost-effective relationships with individual customers, suppliers, employees, and other partners, perhaps even with competitors, for mutual benefit.Goals of Relationship Marketing

To build & maintain a base of committed customers who areprofitable for the Organization

Benefits of Relationship Marketing

Confidence Benefits Feelings of trust in provider, reduced anxiety, great comfort in knowing what to expect.

Social Benefits A sense of familiarity, social relationship with providers.

Special Treatment BenefitsGetting benefit of the doubt, a special deal or price, preferential treatment. For CustomersIncreasing SellsFree Advertising through word-of-mouthLower CostsEmployee RetentionFor Organization

Transaction & Relationship Marketing

CharacteristicTransaction MarketingRelationship MarketingFocusSingle-sellCustomer RetentionOrientationProduct featureProduct benefitTimeShort-termLong-termCustomer service priorityRelatively lowKey componentCustomer contactLow to moderateFrequent

Quality concernModerateHighDegree of customer commitmentLowHigh

Customer Relationship ManagementCRM is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.

Marketers must be concerned with the lifetime value of the customer.

It costs 5 to 10 times MORE to attract a new customer than it does to keep a current customer satisfied.

CRMAttracting, retaining and growing customers

Building customer relationships and customer equityCustomer value/satisfactionMeeting (exceeding) expectations creates satisfaction (Customer Delightness!)Perceptions are key

Loyalty and retentionBenefits of loyalty Loyalty increases with satisfaction levelsDelighting consumers should be the goal

Growing share of customerCross-sellingKey Concepts

CRMAttracting, retaining and growing customers

Building customer relationships and customer equityCustomer equityThe total combined customer lifetime values of all customers.Measures a firms performance, but in a manner that looks to the future.

Customer relationship levels and toolsTarget market typically dictates type of relationshipBasic relationshipsFull relationships

Customer loyalty and retention programsAdding financial benefitsAdding social benefitsKey Concepts

Lifetime Value of a Customer Creates Life-time Revenue and thus the Profitability of the Customer to the Organization. Length of average lifetime Average revenues generated per relevant time period over the lifetime Sales of additional products/services over time Referrals generated by the customer over time

Lifetime Value of a Customer: an exampleIf a 10-persons organization had Tk. 1,000 per month business for the organization, assuming 10 year lifetime for a customer, the value of the customer to the organization will become: Tk. 1,000/month X 12/year X 10 years = Tk. 120,000

If the happy customer creates at least one new customer via word-of-mouth,Tk. 120,000 X 2 new customers = Tk. 240,000

If an average sales person serves 50 customers each day,Tk. 240,000 X 50 Customers = Tk. 12,000,000

Thus an average employee of the organization is managing a Tk. 12,000,000 portfolio of lifetime business for it.

Your CustomersKnow who the lost customers areFind out why they leftEstablish if the problem can be fixedApologize if its our own faultIf the problem can be fixed, fix itIf can not, monitor the situation to see if:Our own abilities changeCustomers preferences or personnel changeLost Customer Programs1. Existing Customers2.Potential Customers

3. Lost Customers

Retention StrategiesFoundation to Retain:Quality Offered in the Core ServiceCareful Market Segmentation & TargetingContinuous Monitoring of Relationships

Customer is NOT Always RightAll customer relationship may not be beneficial, and that every customer is not right all the time:

Customer from the Wrong Segment

If the customer is NOT Profitable in long-run

If the customer is difficult to work with, placing stress on organization and its employees by:Refusing to follow policies of organizationVerbal/physical abuse of employees