Marketing: Managing Profitable Customer Relationships

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Principles of Marketing
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• Marketing Managing Profitable Customer
  Relationships

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Learning Objectives

• After studying this chapter, you should be able
  to
• Define marketing and outline the steps in the
  marketing process
• Explain the importance of understanding customers
  and the marketplace, and identify the five core
  marketplace concepts
• Identify the key elements of a customer-driven
  marketing strategy and discuss the marketing
  management orientations that guide marketing
  strategy
• Discuss customer relationship management, and
  identify strategies for creating value for
  customers and capturing value from customers in
  return
• Describe the major trends and forces that are
  changing the marketing landscape in this age of
  relationships

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Chapter Concepts

• What Is Marketing?
• Understanding the Marketplace and Customer Needs
• Designing a Customer-Driven Marketing Strategy
• Preparing an Integrated Marketing Plan and
  Program
• Building Customer Relationships
• Capturing Value from Customers
• The New Marketing Landscape
• 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
• Understand the marketplace and customer wants and
  needs
• Design a customer-driven marketing strategy
• Construct a marketing plan that delivers superior
  value
• Build profitable relationships and create
  customer satisfaction
• 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
• Physicalfood, clothing, warmth, safety
• Socialbelonging and affection
• Individualknowledge and self-expression

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Understanding the Marketplaceand Customer Needs

• 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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Understanding the Marketplaceand Customer Needs

• Market OfferingsProducts, 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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Understanding the Marketplaceand Customer Needs

• Market OfferingsProducts, 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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Understanding the Marketplaceand Customer Needs

• 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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Understanding the Marketplaceand Customer Needs

• 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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Understanding the Marketplaceand Customer Needs

• 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
• Politicallegal
• 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?

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Designing a Customer-Driven Marketing Strategy

• Selecting Customers to Serve
• Market segmentation Dividing the markets into
  segments of customers
• Target marketing Which segments to go after

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Designing a Customer-Driven Marketing Strategy

• Selecting Customers to Serve
• 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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Designing a Customer-Driven Marketing Strategy

• Selecting Customers to Serve
• Marketing management is
• Customer management
• Demand management

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Designing a Customer-Driven Marketing Strategy

• 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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Designing a Customer-Driven Marketing Strategy

• Marketing Management Orientations
• Production concept
• Product concept
• Selling concept
• Marketing concept
• Societal concept

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Designing a Customer-Driven Marketing Strategy

• Marketing Management Orientations
• Production concept is the idea that consumers
  will favor products that are available or highly
  affordable

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Designing a Customer-Driven Marketing Strategy

• Marketing Management Orientations
• 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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Designing a Customer-Driven Marketing Strategy

• Marketing Management Orientations
• Selling concept is the idea that consumers will
  not buy enough of the firms products unless it
  undertakes a large scale selling and promotion
  effort

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Designing a Customer-Driven Marketing Strategy

• Marketing Management Orientations
• 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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Designing a Customer-Driven Marketing Strategy

• Marketing Management Orientations
• Societal marketing concept is the idea that a
  company should make good marketing decisions by
  considering consumers wants, the companys
  requirements, consumers long-term interests, and
  societys 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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Building Customer Relationships

• Customer Relationship Management
• (CRM)
• Customer perceived value is the difference
  between total customer value and total customer
  cost
• Customer satisfaction is the extent to which a
  products perceived performance matches a buyers
  expectations

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Building Customer Relationships

• Customer Relationship Management
• (CRM)
• Customer Relationship Levels and Tools
• Basic relationship
• Full relationships
• Frequency marketing programs
• Club marketing programs

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Building Customer Relationships

• 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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Building Customer Relationships

• 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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Building Customer Relationships

• Partner Relationship Management
• 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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Building Customer Relationships

• Partner Relationship Management
• 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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Capturing Value from Customers

• Growing Share of Customer
• Share of customer is the portion of the
  customers purchasing that a company gets in its
  product categories

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Capturing Value from Customers

• Building Customer Equity
• Customer equity is the total combined customer
  lifetime values of all of the companys customers

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Capturing Value from Customers

• 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 Marketing Landscape

• 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 Marketing Landscape

• The New Digital Age
• Internetcreates marketplaces and marketspaces
• Information
• Entertainment
• Communication

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The New Marketing Landscape

• Rapid Globalization
• The world is smaller
• Think globally, act locally

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The New Marketing Landscape

• 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 New Marketing Landscape

• 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 New Marketing Landscape

• 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.