Marketing: Managing Profitable Customer Relationships 1 Principles of Marketing

Marketing: Managing Profitable Customer

Relationships

11

Principles of Marketing

Learning Objectives

After studying this chapter, you should be able to:1. Define marketing and outline the steps in the marketing

process2. Explain the importance of understanding customers and

the marketplace, and identify the five core marketplace concepts

3. Identify the key elements of a customer-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy

4. Discuss customer relationship management, and identify strategies for creating value for customers and capturing value from customers in return

5. Describe the major trends and forces that are changing the marketing landscape in this age of relationships

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Chapter Concepts

1. What Is Marketing?2. Understanding the Marketplace and Customer

Needs3. Designing a Customer-Driven Marketing

Strategy4. Preparing an Integrated Marketing Plan and

Program5. Building Customer Relationships6. Capturing Value from Customers7. The New Marketing Landscape8. So, What Is Marketing? Pulling It All Together

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What Is Marketing?

Marketing Defined

Marketing is the process by which companies create value for customers and build strong customer relationships to capture value from customers in return

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What Is Marketing?

The Marketing Process

1. Understand the marketplace and customer wants and needs

2. Design a customer-driven marketing strategy3. Construct a marketing plan that delivers

superior value4. Build profitable relationships and create

customer satisfaction5. Capture value from customers to create

profit and customer equity

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Understanding the Marketplaceand Customer Needs

Customer Needs, Wants, and Demands

• Needs are states of deprivation• Physical—food, clothing, warmth,

safety• Social—belonging and affection• Individual—knowledge and self-

expression

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Customer Needs, Wants, and Demands

Wants are the form that needs take as they are shaped by culture and individual personality

Demands are wants backed by buying power

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Market Offerings—Products, Services, and Experiences

Market offerings are some combination of products, services, information, or experiences offered to a market to satisfy a need or want

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Market Offerings—Products, Services, and Experiences

Marketing myopia is focusing only on existing wants and losing sight of underlying consumer needs

Exchange is the act of obtaining a desired object from someone by offering something in return

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Customer Value and Satisfaction

• Expectations• Customers

• Value and satisfaction• Marketers

• Set the right level of expectations• Not too high or too low

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Exchanges and Relationships

Exchange is the act of obtaining a desired object from someone by offering something in return

Relationships consist of actions to build and maintain desirable relationships

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Markets are the set of actual and potential buyers of a product

Marketing system consists of all of the actors (suppliers, company, competitors, intermediaries, and end users) in the system who are affected by major environmental forces

• Demographic• Economic• Physical• Technological• Political–legal• Socio-cultural

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Designing a Customer-Driven Marketing Strategy

Marketing Management

Marketing management is the art and science of choosing target markets and building profitable relationships with them

• What customers will we serve?• How can we best serve these

customers?1-13


Selecting Customers to Serve

Market segmentation: Dividing the markets into segments of customers

Target marketing: Which segments to go after

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De-marketing: Marketing to reduce demand temporarily or permanently; the aim is not to destroy demand but to reduce or shift it.

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Marketing management is:• Customer management• Demand management

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Choosing a Value Proposition

The value proposition is the set of benefits or values a company promises to deliver to customers to satisfy their needs

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Marketing Management Orientations

• Production concept• Product concept• Selling concept• Marketing concept• Societal concept

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Production concept is the idea that consumers will favor products that are available or highly affordable

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Product concept is the idea that consumers will favor products that offer the most quality, performance, and features for which the organization should therefore devote its energy to making continuous improvements

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Selling concept is the idea that consumers will not buy enough of the firm’s products unless it undertakes a large scale selling and promotion effort

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Marketing concept is the idea that achieving organizational goals depends on knowing the needs and wants of the target markets and delivering the desired satisfactions better than competitors do

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Societal marketing concept is the idea that a company should make good marketing decisions by considering consumers’ wants, the company’s requirements, consumers’ long-term interests, and society’s long-run interests

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Preparing an Integrated Marketing Plan and Program

Marketing Mix

The marketing mix is the set of tools (four Ps) the firm uses to implement its marketing strategy

• Product• Price• Promotion• Place

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Preparing an Integrated Marketing Plan and Program

Integrated Marketing Program

Integrated marketing program is a comprehensive plan that communicates and delivers the intended value to chosen customers

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Building Customer Relationships

Customer Relationship Management

(CRM)

Customer relationship management is the overall process of building and maintaining profitable customer relationships by delivering superior value and satisfaction

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(CRM)

Customer perceived value is the difference between total customer value and total customer cost

Customer satisfaction is the extent to which a product’s perceived performance matches a buyer’s expectations

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(CRM)

Customer Relationship Levels and Tools

• Basic relationship• Full relationships• Frequency marketing programs• Club marketing programs

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The Changing Nature of Customer Relationships

Relating with more carefully selected customers uses selective relationship management to target fewer, more profitable customers

Relating for the long term uses customer relationship management to retain current customers and build profitable, long-term relationships

Relating directly uses direct marketing tools (telephone, mail order, kiosks, Internet) to make direct connections with customers

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Partner Relationship Management

Partner relationship management refers to working closely with partners in other company departments and outside the company to jointly bring greater value to customers

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Partners inside the company is every function area interacting with customers

• Electronically• Cross-functional teams

Partners outside the company is how marketers connect with their suppliers, channel partners, and competitors by developing partnerships

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Supply chain is a channel that stretches from raw materials to components to final products to final buyers

• Supply management• Strategic partners• Strategic alliances

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Capturing Value from Customers

Creating Customer Loyalty and Retention

Customer lifetime value is the value of the entire stream of purchases that the customer would make over a lifetime of patronage

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Growing Share of Customer

Share of customer is the portion of the customer’s purchasing that a company gets in its product categories

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Building Customer Equity

Customer equity is the total combined customer lifetime values of all of the company’s customers

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Building Customer Equity

Building the right relationships with the right customers involves treating customers as assets that need to be managed and maximized

• Different types of customers require different relationship management strategies

• Build the right relationship with the right customers

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The New Marketing Landscape

Major Developments

• Digital age• Globalization• Ethics and social responsibility• Not-for-profit marketing

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The New Digital Age• Recent technology has had a major impact on

the ways marketers connect with and bring value to their customers

• Market research • Learning about and tracking customers

• Create new customized products• Distribution• Communication

• Video conferencing• Online data services

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The New Digital Age

Internet—creates marketplaces and marketspaces

• Information• Entertainment• Communication

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Rapid Globalization

• The world is smaller• Think globally, act locally

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The Call for More Ethics and Social Responsibility

Marketers are being called upon to take greater responsibility for the social and environmental impact of their actions in a global economy

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The Call for More Ethics and Social Responsibility

Social marketing campaigns encourage energy conservation and concern for the environment or discourage smoking, excessive drinking, and drug use

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The Growth for Not-for-Profit Marketing

• Colleges• Hospitals• Museums• Zoos• Orchestras• Religious groups

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PowerPoint created by:

Ronald Heimler

Dowling College, MBA Georgetown University, BS Business

Administration Adjunct Professor, LIM College, NY Adjunct Professor, Long Island

University, NY Lecturer, California Polytechnic State

University, Pomona, CA President, Walter Heimler, Inc.

Documents

Marketing: Managing Profitable Customer Relationships 1 Principles of Marketing