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A Brief Introduction to Marketing and Customer
Relationship Building
Jeremy Kees, Ph.D.
Who is Jeremy Kees??
CONSUMER
• American Marketing Association’sAmerican Marketing Association’s new official definition of marketing released August 2007:
– Marketing is 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.
• Kotler & Keller’sKotler & Keller’s definition of marketing management:
– The art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value.
Value, Value, Value
• Successful products and services deliver value and satisfaction to customers– We make buying decisions based on
which product is perceived to offer the most value
– Tangible/Intangible benefits vs. cost
How do we create customers?
– Identifying customer needs– Designing goods and services that meet
those needs– Communicate Information about those
goods and services to prospective buyers– Making the goods or services available at
times and places that meet customers’ needs
– Pricing goods and services to reflect costs, competition, and customers’ ability to buy
– Providing for the necessary service and follow-up
How do we create VALUE?• Identify the needs in the marketplace• Find out which needs the organization can
profitably serve• Design goods and services that meet those
needs• Developing a marketing mix that will convert
potential customers into actual customers• Providing for the necessary service and follow-
up after the service
“4 Eras” of Marketing
From transaction-based marketing to relationship marketing…
• Transaction–based marketing (Simple exchanges)
• Relationship marketing– Lifetime value of a customer– Converting new customers to
advocates
From transaction-based marketing to relationship marketing…
Transaction vs. Relationship Marketing
Three Levels of Relationship Marketing
Characteristic
Level 1 Level 2 Level 3
Primary bond Financial Social StructuralDegree of customization
Low Medium Medium to high
Potential for sustained competitive advantage
Low Moderate High
Let’s take a step back…
• Although it is very important to try to build relationships with customers to ensure LT success
• But, it is just as important to determine which consumers we want this relationship with!!– Target Market– “Costly” Consumers– Sprint Video
Customer Relationship Management (CRM)
The combination of strategies and tools that drive relationship programs, re-orientating the entire organization to a concentrated focus on satisfying customers
Strategies for Building Customer Relationships• Affinity Programs
– a marketing effort sponsored by an organization that solicits responses from individuals who share common interests and activities
– BOA
Strategies for Building Customer Relationships• Frequency Marketing
– frequent-buyer or user marketing programs that reward customers with cash, rebates, merchandise, or other premiums
– Examples??– Thankyou Rewards Spot– But not just for hotels and
airlines…
Strategies for Building Customer Relationships• Database Marketing
– software that analyzes marketing information, then identifies and targets messages toward specific groups of potential customers
– http://www.wyndham.com
Strategies for Building B2B Relationships• Strategic alliance
– a partnership formed to create a competitive advantage
– These more formal long-term partnership arrangements improved each partner supply-chain relationships and enhance flexibility
– Wal-Mart!
Strategies for Building B2B Relationships• Electronic Data Interchange (EDI)
– involves computer-to-computer exchanges of invoices, orders, and other business documents
• Vendor Managed Inventory (VMI)– is an inventory-management system
in which the seller–based on existing agreement with a buyer– determines how much of a product is needed
Strategies for Building B2B Relationships• Database Marketing
– software that analyzes marketing information, then identifies and targets messages toward specific groups of potential customers
Evaluating Relationships
• Lifetime Value (LTV)– Refers to the net present value of the
potential revenue stream for any particular customer over a # of years
– Starts with current purchase activity then extrapolates to include potential additions from cross-selling, upgrades, total ownership, etc.
Marketing Concept
• Based on Consumer Orientation– 100% focus toward the consumer– Consumer drives company-wide
decisions• Focused on LONG TERM success
Building Buyer-Seller Relationships• Many customers are seeking ways to simplify
their lives, and relationships provide a way to do this
• Customers find comfort with brands that have become familiar through their ongoing relationships with companies or when they feel like they can relate to a company– Dove’s Campaign for REAL Beauty
• Evolution
• Such relationships often lead to more efficient decision-making my customers and higher levels of customer satisfaction
The Value of Customer Retention
• On average, it costs over 10 TIMES more to acquire a new customer versus retain an existing one
• A 5% gain in customer retention can result in an 80% gain in profits.