Marketing: Managing Profitable Customer Relationships Chapter 1 1

Marketing: Managing Profitable Customer Relationships Chapter 1 1

Learning Goals 1. Define marketing and the marketing process. 2. Explain the importance of understanding customers and identify the five core marketplace concepts 3. Identify the elements of a customer-driven marketing strategy and discuss the marketing management orientations. 4. Discuss customer relationship management

What is Marketing? Marketing Defined: “The process by which companies create value for the customers and build strong customer relationships in order to capture value from customers in return” Marketing is about managing profitable customer relationships The twofold goal of marketing is Attracting new customers Retaining and growing current customers Goal 1: Define marketing and the marketing process.

The Marketing Process Create value for customers and build customer relationships Understand the marketplac e and customer needs and wants Design a Customerdriven marketing strategy Construct a marketing program that delivers superior value Capture value from customers in return Build profitable relationshi ps and create customer delight Capture value from custome rs to create profits and custome r quality Goal 1: Define marketing and the marketing process.

Understanding the Marketplace and customer needs Needs, wants, and demands Need Wants State of felt deprivation Example: Need food The form needs as shaped by culture and the individual Example: Want a Big Mac Demands Wants which are backed by buying power

Understanding the Marketplace and customer needs Marketing offers: Products Services Events Experiences Persons Places Ideas Organizations Information

Understanding the Marketplace and customer needs Value and satisfaction Value Customer-perceived value Customer’s evaluation of the difference between all the benefits and all the cost of a market offering relative to those of competing products. Customers form expectations regarding value Marketers must deliver value to consumers Satisfaction Customer satisfaction The extent to which a product’s perceived performance matches a buyer’s expectations A satisfied customer will buy again and tell others about their good experience

Understanding the Marketplace and customer needs Exchange, transactions and relationships Exchange The act of obtaining a desired object from someone by offering something in return One exchange is not the goal, relationships with several exchanges are the goal Relationships are built through delivering value and satisfaction Markets Market Set of actual and potential buyers of a product Marketers seek buyers that are profitable

Marketing Management Marketing management is the art and science of choosing target markets and building profitable relationships with them. This definition must include answers to two questions: What customers will we serve? How can we serve these customers best? Goal 3: Identify elements of a customer-driven strategy.

Marketing Management Selecting customers to serve Dividing the market into segments of customers- Market segmentation Selecting which segments it will go afterTarget marketing Demarketing Value proposition Set of benefits or values it promises to deliver to customers to satisfy their needs.

Value Proposition iPhone Nokia Nokia

Marketing Management Orientations Production concept Product concept Goal 3: Selling concept Marketing concept Societal marketing concept Identify elements of a customer-driven strategy.

The Production Concept Assumes that consumers are interested primarily in product availability at low prices Marketing objectives: Cheap, efficient production Intensive distribution Market expansion

The Product Concept Assumes that consumers will buy the product that offers them the highest quality, the best performance, and the most features Marketing objectives: Quality improvement Addition of features

Marketing Myopia A focus on the existing product only rather than the consumer needs it presumes to satisfy Management’s failure to recognize the scope of the business Product-oriented rather than customer-oriented management endangers future growth

Avoiding Marketing Myopia by focusing on benefits Company Myopic Description Marketing oriented description Cingular “We are a telephone company” “We are a communications company” JetBlue Airways “We are in the airline “We are in the transportation business” business” Sony “We are in the video game business” We are in the entertainment Business

The Selling Concept Assumes that consumers are unlikely to buy a product unless they are aggressively persuaded to do so Marketing objectives: Sell, sell, sell Lack of concern for customer needs and satisfaction

The Marketing Concept Assumes that to be successful, a company must determine the needs and wants of specific target markets and deliver the desired satisfactions better than the competition Marketing objectives: Profits through customer satisfaction

Societal Marketing Concept Assumes that marketing strategy should deliver value to customers in a way that maintain and improves both the consumer’s and society’s well-being Society (Human Welfare) Consumers (Want Satisfaction) Societal Marketing Concept Company (Profits)

The Marketing Plan Transforms the marketing strategy into action Includes the marketing mix -The 4P’s of marketing Product Price Place Promotion Goal 3: Identify elements of a customer-driven strategy.

Marketing mixes- 4P’s Product Price Decide how much it will charge for the offer Place Firm must first create a need satisfying market offering Decide how it will make the offer available to target consumers Promotion Communicate with target customers about the offer and persuade them of its merit Goal 3: Identify elements of a customer-driven strategy.

Building Customer Relationships CRM–Customer relationship management The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. It deals with all aspects of acquiring, keeping and growing customers. Goal 4: Discuss CRM