“ Marketing”: What does it mean? Principles of Marketing – Spring 2008 Dr. Hila Riemer Unit 1
Agenda <ul><li>Introduce ourselves </li></ul><ul><li>What is “marketing? </li></ul><ul><li>Course matters </li></ul>
Foundations of Marketing <ul><li>What We Will Cover </li></ul><ul><ul><li>What is Marketing? </li></ul></ul><ul><ul><li>Th...
What is Marketing?
<ul><li>Founded ~1965 –with a unique concept of drip irrigation- a revolutionary irrigation practice. </li></ul><ul><li>To...
<ul><li>Creating Value </li></ul><ul><li>Netafim sells the knowledge and advanced solutions  – in irrigation. </li></ul><u...
What Is Marketing? <ul><li>Simple Definition:   Marketing is managing profitable customer relationships. </li></ul><ul><li...
Marketing Defined <ul><li>A social and managerial process by which individuals and groups obtain what they  need  and  wan...
<ul><li>“… the aim of marketing is to make selling superfluous.  The aim of marketing is to know and understand the custom...
A Simple Model of the Marketing Process Create value  for  customers and build customer relationships Capture value  from ...
The Marketplace and Customer Needs
What Motivates a Consumer to Take Action? <ul><li>Needs  </li></ul><ul><li>Wants </li></ul><ul><li>Demands </li></ul>
Needs, Wants, & Demands <ul><li>Need:   State of felt deprivation including physical, social, and individual needs. </li><...
<ul><li>Wants:  Form that a human need takes, as shaped by culture and individual personality. </li></ul><ul><li>(e.g., I ...
Let’s apply…. <ul><li>Consumers usually choose from a tremendous variety of products and services to satisfy a given need ...
Need / Want Fulfillment <ul><li>Needs and wants are fulfilled through a  Marketing Offer : </li></ul><ul><ul><li>Some comb...
Need / Want Satisfiers <ul><li>Products: </li></ul><ul><ul><li>Persons </li></ul></ul><ul><ul><li>Places </li></ul></ul><u...
Products Can Be Ideas <ul><li>Products do not have to be physical objects.  Here the “product” is an idea -- protecting an...
Need / Want Satisfiers <ul><li>Products: </li></ul><ul><ul><li>Persons </li></ul></ul><ul><ul><li>Places </li></ul></ul><u...
<ul><li>Brand Experiences:  </li></ul><ul><ul><li>“ . . . dazzle their senses, touch their hearts, stimulate their minds.”...
<ul><li>Brand Experiences:  </li></ul><ul><ul><li>“ . . . dazzle their senses, touch their hearts, stimulate their minds.”...
Let’s Talk! Does the ad shown at right promote consumer experiences?  Explain. Offer a different example of  a current adv...
Marketing Myopia <ul><li>Marketing myopia  occurs when sellers pay more attention to the specific products they offer than...
Marketing in Action Focused on selling prerecorded CDs, the record industry missed early opportunities to partner with mus...
How Do Consumers Obtain Products and Services? <ul><li>Exchanges:  act of obtaining a desired object from someone by offer...
What is a Market? <ul><li>The set of actual and potential buyers of a product. </li></ul><ul><li>These people share a need...
Modern Marketing Systems <ul><li>Main elements in a modern marketing system include: </li></ul><ul><ul><li>Suppliers </li>...
Elements of a Modern Marketing System
To summarize what we have discussed so far… <ul><li>Why is understanding customer wants so critical for marketers?  </li><...
Marketing Management
Marketing Management <ul><li>The process of planning and executing the conception, pricing, promotion, and distribution of...
Marketing Management <ul><li>The art and science of choosing target markets and building profitable relationships with the...
Segmentation & Target Marketing <ul><li>Market Segmentation: </li></ul><ul><ul><li>Divide the market into segments of cust...
<ul><li>Pair up with another student and discuss the ad shown at right. </li></ul><ul><li>Are you part of the target marke...
Let’s discuss <ul><li>Why is target market selection important for a customer-driven marketing strategy?  How might target...
Marketing Management <ul><li>The task of influencing the level, timing, and composition of demand in a way that will help ...
The basic Marketing Tasks Countermarketing Destroy demand Unwholesome demand Demarketing Reduce demand Overfull marketing ...
Marketing in Action Demarketing is often used to discourage undesirable behaviors. Is this ad effective?   Visit the Offic...
Marketing Management Orientations
Marketing Management Philosophies <ul><li>Production Concept </li></ul><ul><li>Product Concept </li></ul><ul><li>Selling C...
Marketing Management Philosophies <ul><li>Production Concept </li></ul><ul><ul><li>Consumers favor products that are avail...
Question <ul><li>What is a limitation (or drawback) of having a product orientation? </li></ul><ul><li>Marketing Myopia </...
Marketing Management Philosophies (cont’d) <ul><li>Selling Concept </li></ul><ul><ul><li>Consumers will buy products only ...
Marketing and Sales Concepts Contrasted
Customer-Driven Marketing <ul><li>Twenty years ago, how many consumers would have thought to ask for laptops, wireless hea...
Marketing Management Philosophies (cont’d) <ul><li>Societal Marketing Concept </li></ul><ul><ul><li>Delivering value to cu...
A Simple Model of the Marketing Process Create value  for  customers and build customer relationships Capture value  from ...
The Marketing Plan <ul><li>Transforms the marketing strategy into action </li></ul><ul><li>Includes the marketing mix and ...
C The Marketing Mix - The Four Ps
The Marketing Mix - The Four Ps C Product Place Price Promotion
The Marketing Mix - The Four Ps <ul><li>Total Product Concept </li></ul><ul><li>Branding </li></ul><ul><li>Packaging </li>...
The Marketing Mix - The Four Ps <ul><li>Pricing objectives </li></ul><ul><li>Pricing Policies  </li></ul><ul><ul><li>Price...
The Marketing Mix - The Four Ps <ul><li>Two Perspectives: </li></ul><ul><ul><li>Distribution Channels  </li></ul></ul><ul>...
The Marketing Mix - The Four Ps <ul><li>Strategy decisions </li></ul><ul><li>to blend: </li></ul><ul><ul><li>Personal Sell...
Competitors Marketing Intermediaries Publics Suppliers Demographic- Economic Environment Technological- Natural Environmen...
A Simple Model of the Marketing Process Create value  for  customers and build customer relationships Capture value  from ...
Customer Relationship Management (CRM) <ul><li>The overall process of building and maintaining profitable customer relatio...
A Simple Model of the Marketing Process Create value  for  customers and build customer relationships Capture value  from ...
Customer Loyalty and Profitability <ul><li>Customer Lifetime Value (CLV) </li></ul><ul><ul><li>The value of the entire str...
Customer Relationship Groups Projected loyalty High Profitability Low Long-term customers Short-term customers Good fit be...
Marketing in Action To keep customers coming back, Stew Leonard’s has created the “Disneyland of dairy stores.” Focus on C...
Let’s apply <ul><li>Companies measuring customer lifetime value determine the potential profit from the stream of purchase...
So, What is Marketing?  Pulling it all together….
A Simple Model of the Marketing Process
A Simple Model of the Marketing Process Create value  for  customers and build customer relationships Capture value  from ...
Expanded Model of the Marketing Process
New Marketing Landscape <ul><li>Rapid Globalization </li></ul><ul><li>Ethics and Social Responsibility </li></ul><ul><li>N...
<ul><li>Define marketing and the marketing process. </li></ul><ul><li>Explain the importance of understanding customers an...
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Unit 1defining-marketing-and-the-marketing-processto-post-1225713105638611-8

  1. 1. “ Marketing”: What does it mean? Principles of Marketing – Spring 2008 Dr. Hila Riemer Unit 1
  2. 2. Agenda <ul><li>Introduce ourselves </li></ul><ul><li>What is “marketing? </li></ul><ul><li>Course matters </li></ul>
  3. 3. Foundations of Marketing <ul><li>What We Will Cover </li></ul><ul><ul><li>What is Marketing? </li></ul></ul><ul><ul><li>The Marketplace and Customer Needs </li></ul></ul><ul><ul><li>Marketing Management </li></ul></ul><ul><ul><li>Marketing Management Philosophies </li></ul></ul><ul><ul><li>Building Customer Relationships </li></ul></ul>
  4. 4. What is Marketing?
  5. 5. <ul><li>Founded ~1965 –with a unique concept of drip irrigation- a revolutionary irrigation practice. </li></ul><ul><li>Today: </li></ul><ul><li>Sales of more than 350 million dollars a year, </li></ul><ul><li>32 subsidiaries </li></ul><ul><li>Operating in more then 110 countries </li></ul><ul><li>12 manufacturing facilities worldwide, </li></ul><ul><li>The largest low-volume irrigation company in the world. </li></ul><ul><li>Netafim's continuously-expanding lineup of innovative products are used in every type of agricultural venture - from high tech corporate farms to traditional family owned farms in developing countries. </li></ul><ul><li>Today, Netafim is a well-known global leader in the field of innovative irrigation-based solutions and water technologies that solve problems and raise productivity, while protecting the environment and saving water. </li></ul>
  6. 6. <ul><li>Creating Value </li></ul><ul><li>Netafim sells the knowledge and advanced solutions – in irrigation. </li></ul><ul><li>Netafim engages customers via knowledge and service. </li></ul><ul><li>Netafim’s 40 years of worldwide experience in irrigation and agro- solutions allows our agronomists to provide answers to any challenge in a wide variety of local growing conditions.  </li></ul><ul><li>Success has been achieved by creating lasting customer relationships. </li></ul>Case Study <ul><li>Capturing Value </li></ul><ul><li>Netafim is the largest low-volume irrigation company in the world. </li></ul><ul><li>More the 350 Million US dollars a year in more then 110 countries. </li></ul><ul><li>Netafim's continuously-expanding lineup of innovative products are used in every type of agricultural venture - from high tech corporate farms to traditional family owned farms in developing countries. </li></ul><ul><li>Today, Netafim is a well-known global leader in the field of innovative irrigation-based solutions and water technologies that solve problems and raise productivity, while protecting the environment and saving water. </li></ul>Netafim – What is its secret?
  7. 7. What Is Marketing? <ul><li>Simple Definition: Marketing is managing profitable customer relationships. </li></ul><ul><li>Goals: </li></ul><ul><li>Attract new customers by promising superior value. </li></ul><ul><li>Keep and grow current customers by delivering satisfaction. </li></ul>
  8. 8. Marketing Defined <ul><li>A social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others. </li></ul>OLD View of Marketing: Making a Sale – “Telling & Selling” New View of Marketing: Satisfying customer needs NEW View of Marketing: Satisfying Customer Needs
  9. 9. <ul><li>“… the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy. All that should be needed then is to make the product of service available…” </li></ul><ul><li>Peter Drucker </li></ul>Marketing Defined (cont’d)
  10. 10. A Simple Model of the Marketing Process Create value for customers and build customer relationships Capture value from customers in return Understand the marketplace and customer needs and wants Capture value from customers to create profits and customer equity Design a customer-driven marketing strategy Build profitable relationships and create customer delight Construct a marketing program that delivers superior value
  11. 11. The Marketplace and Customer Needs
  12. 12. What Motivates a Consumer to Take Action? <ul><li>Needs </li></ul><ul><li>Wants </li></ul><ul><li>Demands </li></ul>
  13. 13. Needs, Wants, & Demands <ul><li>Need: State of felt deprivation including physical, social, and individual needs. </li></ul><ul><ul><li>Physical needs: </li></ul></ul><ul><ul><ul><li>Food, clothing, shelter, safety </li></ul></ul></ul><ul><ul><ul><li>(e.g., I am thirsty.) </li></ul></ul></ul><ul><ul><li>Social needs: </li></ul></ul><ul><ul><ul><li>Belonging, affection </li></ul></ul></ul><ul><ul><li>Individual needs: </li></ul></ul><ul><ul><ul><li>Learning, knowledge, self-expression </li></ul></ul></ul>
  14. 14. <ul><li>Wants: Form that a human need takes, as shaped by culture and individual personality. </li></ul><ul><li>(e.g., I want a Coke.) </li></ul><ul><li>Wants + Buying Power = Demand </li></ul>Needs, Wants, & Demands
  15. 15. Let’s apply…. <ul><li>Consumers usually choose from a tremendous variety of products and services to satisfy a given need or want. </li></ul><ul><li>Consider your need for nourishment. </li></ul><ul><ul><li>How does that need translate into different wants? </li></ul></ul><ul><ul><li>What marketing offers are available to satisfy your needs that also appeal to your wants? </li></ul></ul><ul><ul><li>How might other consumers in different market segments meet the same need for nourishment? </li></ul></ul>
  16. 16. Need / Want Fulfillment <ul><li>Needs and wants are fulfilled through a Marketing Offer : </li></ul><ul><ul><li>Some combination of products, services, information, or experiences offered to a market to satisfy a need or want. </li></ul></ul>
  17. 17. Need / Want Satisfiers <ul><li>Products: </li></ul><ul><ul><li>Persons </li></ul></ul><ul><ul><li>Places </li></ul></ul><ul><ul><li>Organizations </li></ul></ul><ul><ul><li>Information </li></ul></ul><ul><ul><li>Ideas </li></ul></ul><ul><li>Services </li></ul><ul><ul><li>Activity or benefit offered for sale that is essentially intangible and does not result in ownership. </li></ul></ul>
  18. 18. Products Can Be Ideas <ul><li>Products do not have to be physical objects. Here the “product” is an idea -- protecting animals. </li></ul><ul><li>Products can also be people, organizations, places, or information. </li></ul>Marketing in Action
  19. 19. Need / Want Satisfiers <ul><li>Products: </li></ul><ul><ul><li>Persons </li></ul></ul><ul><ul><li>Places </li></ul></ul><ul><ul><li>Organizations </li></ul></ul><ul><ul><li>Information </li></ul></ul><ul><ul><li>Ideas </li></ul></ul><ul><li>Services </li></ul><ul><ul><li>Activity or benefit offered for sale that is essentially intangible and does not result in ownership. </li></ul></ul><ul><li>Brand Experiences: </li></ul><ul><ul><li>“ . . . dazzle their senses, touch their hearts, stimulate their minds.” </li></ul></ul>
  20. 20. <ul><li>Brand Experiences: </li></ul><ul><ul><li>“ . . . dazzle their senses, touch their hearts, stimulate their minds.” </li></ul></ul>
  21. 21. <ul><li>Brand Experiences: </li></ul><ul><ul><li>“ . . . dazzle their senses, touch their hearts, stimulate their minds.” </li></ul></ul>
  22. 22. Let’s Talk! Does the ad shown at right promote consumer experiences? Explain. Offer a different example of a current advertising campaign that promotes a “consumer experience.” Do you believe the campaign is effective? Why or why not?
  23. 23. Marketing Myopia <ul><li>Marketing myopia occurs when sellers pay more attention to the specific products they offer than to the benefits and experiences produced by the products. </li></ul><ul><li>They focus on the “wants” and lose sight of the “needs.” </li></ul>
  24. 24. Marketing in Action Focused on selling prerecorded CDs, the record industry missed early opportunities to partner with music downloading services and manufacturers of digital MP3 type recording devices. Marketing Myopia in the Recording Industry
  25. 25. How Do Consumers Obtain Products and Services? <ul><li>Exchanges: act of obtaining a desired object from someone by offering something in return </li></ul><ul><li>Transactions: trade of values between two parties (usually involve money and a response) </li></ul><ul><li>Relationships: building long-term interactions with consumers, dealers, distributors, and suppliers </li></ul>
  26. 26. What is a Market? <ul><li>The set of actual and potential buyers of a product. </li></ul><ul><li>These people share a need or want that can be satisfied through exchange relationships. </li></ul>
  27. 27. Modern Marketing Systems <ul><li>Main elements in a modern marketing system include: </li></ul><ul><ul><li>Suppliers </li></ul></ul><ul><ul><li>Company (marketer) </li></ul></ul><ul><ul><li>Competitors </li></ul></ul><ul><ul><li>Marketing intermediaries </li></ul></ul><ul><ul><li>Final users </li></ul></ul>
  28. 28. Elements of a Modern Marketing System
  29. 29. To summarize what we have discussed so far… <ul><li>Why is understanding customer wants so critical for marketers? </li></ul><ul><li>How are the concepts of value and satisfaction related to each other? </li></ul><ul><li>What is the difference between transactions and relationships? </li></ul>
  30. 30. Marketing Management
  31. 31. Marketing Management <ul><li>The process of planning and executing the conception, pricing, promotion, and distribution of goods, services, and ideas to create exchanges with target groups that satisfy customer and organization objectives. </li></ul>
  32. 32. Marketing Management <ul><li>The art and science of choosing target markets and building profitable relationships with them. </li></ul><ul><li>Questions to ask </li></ul><ul><ul><li>What customers will we serve? </li></ul></ul><ul><ul><ul><li>What is our target market? </li></ul></ul></ul><ul><ul><li>How can we best serve these customers? </li></ul></ul><ul><ul><ul><li>What is our value proposition? </li></ul></ul></ul>
  33. 33. Segmentation & Target Marketing <ul><li>Market Segmentation: </li></ul><ul><ul><li>Divide the market into segments of customers </li></ul></ul><ul><li>Target Marketing: </li></ul><ul><ul><li>Select the segment to cultivate </li></ul></ul>
  34. 34. <ul><li>Pair up with another student and discuss the ad shown at right. </li></ul><ul><li>Are you part of the target market for this product? </li></ul><ul><li>List the personal traits, variables, or factors that characterize members of this market segment. </li></ul>Let’s Talk!
  35. 35. Let’s discuss <ul><li>Why is target market selection important for a customer-driven marketing strategy? How might target market selection impact customer satisfaction? </li></ul>
  36. 36. Marketing Management <ul><li>The task of influencing the level, timing, and composition of demand in a way that will help the organization achieve its objectives. </li></ul><ul><li>Demand Management </li></ul><ul><ul><li>Finding and increasing demand, also changing or reducing demand, as in demarketing. </li></ul></ul>
  37. 37. The basic Marketing Tasks Countermarketing Destroy demand Unwholesome demand Demarketing Reduce demand Overfull marketing Maintenance marketing Maintain demand Full demand Synchoromarketing Synchronize demand Irregular demand Remarketing Revitalize demand Faltering demand Developmental marketing Develop demand Latent demand Stimulational marketing Create demand No demand Conversional marketing Disabuse demand Negative demand Formal Name Marketing Task Demand state
  38. 38. Marketing in Action Demarketing is often used to discourage undesirable behaviors. Is this ad effective? Visit the Office of National Drug Control Policy ad gallery. mediacampaign.org Demarketing
  39. 39. Marketing Management Orientations
  40. 40. Marketing Management Philosophies <ul><li>Production Concept </li></ul><ul><li>Product Concept </li></ul><ul><li>Selling Concept </li></ul><ul><li>Marketing Concept </li></ul><ul><li>Societal Marketing Concept </li></ul>
  41. 41. Marketing Management Philosophies <ul><li>Production Concept </li></ul><ul><ul><li>Consumers favor products that are available and highly affordable. </li></ul></ul><ul><ul><li>Focus on improving production and distribution efficiency </li></ul></ul><ul><li>Product Concept </li></ul><ul><ul><li>Consumers favor products that offer the most quality, performance, and innovative features. </li></ul></ul><ul><ul><li>Focus on making continuous product improvements </li></ul></ul>
  42. 42. Question <ul><li>What is a limitation (or drawback) of having a product orientation? </li></ul><ul><li>Marketing Myopia </li></ul><ul><ul><li>Paying more attention to the specific products than to the benefits and experiences produced by the products </li></ul></ul><ul><ul><li>Focus more on the “wants” and lose sight of the “needs” </li></ul></ul>
  43. 43. Marketing Management Philosophies (cont’d) <ul><li>Selling Concept </li></ul><ul><ul><li>Consumers will buy products only if the company promotes or sells these product. </li></ul></ul><ul><ul><li>Focus on promotions and advertising </li></ul></ul><ul><li>Marketing Concept </li></ul><ul><ul><li>Knowing the needs and wants of target markets and delivering the desired satisfaction better than competitors </li></ul></ul><ul><ul><li>Customer-centered “sense and respond” philosophy </li></ul></ul><ul><ul><li>Finding the right products for your customers (not vice versa) </li></ul></ul>
  44. 44. Marketing and Sales Concepts Contrasted
  45. 45. Customer-Driven Marketing <ul><li>Twenty years ago, how many consumers would have thought to ask for laptops, wireless headsets, cell phones, MP3 players, PDAs, and digital cameras? </li></ul><ul><li>Marketers must often understand customer needs even better than customers themselves do; customers often can’t articulate what they really need. </li></ul>Marketing in Action
  46. 46. Marketing Management Philosophies (cont’d) <ul><li>Societal Marketing Concept </li></ul><ul><ul><li>Delivering value to customers in a way that maintains or improves both the consumer’s and the society’s well-being </li></ul></ul>
  47. 47. A Simple Model of the Marketing Process Create value for customers and build customer relationships Capture value from customers in return Understand the marketplace and customer needs and wants Capture value from customers to create profits and customer equity Design a customer-driven marketing strategy Build profitable relationships and create customer delight Construct a marketing program that delivers superior value
  48. 48. The Marketing Plan <ul><li>Transforms the marketing strategy into action </li></ul><ul><li>Includes the marketing mix and 4 P’s of marketing… </li></ul>
  49. 49. C The Marketing Mix - The Four Ps
  50. 50. The Marketing Mix - The Four Ps C Product Place Price Promotion
  51. 51. The Marketing Mix - The Four Ps <ul><li>Total Product Concept </li></ul><ul><li>Branding </li></ul><ul><li>Packaging </li></ul><ul><li>Warranties </li></ul><ul><li>Product-line assortment </li></ul><ul><li>New product development </li></ul>C Product Place Price Promotion
  52. 52. The Marketing Mix - The Four Ps <ul><li>Pricing objectives </li></ul><ul><li>Pricing Policies </li></ul><ul><ul><li>Price Flexibility </li></ul></ul><ul><ul><li>Levels over PLC </li></ul></ul><ul><ul><li>Discounts and allowances </li></ul></ul><ul><ul><li>Geographic terms </li></ul></ul><ul><li>Legal factors </li></ul><ul><li>Markup chain in channels </li></ul><ul><li>Costs </li></ul><ul><li>Demand (price sensitivity) </li></ul><ul><ul><li>Competition/Substitutes </li></ul></ul><ul><li>Price of other products in line </li></ul>C Product Place Price Promotion
  53. 53. The Marketing Mix - The Four Ps <ul><li>Two Perspectives: </li></ul><ul><ul><li>Distribution Channels </li></ul></ul><ul><ul><li>Logistics </li></ul></ul>C Product Place Price Promotion
  54. 54. The Marketing Mix - The Four Ps <ul><li>Strategy decisions </li></ul><ul><li>to blend: </li></ul><ul><ul><li>Personal Selling </li></ul></ul><ul><ul><li>Advertising </li></ul></ul><ul><ul><li>Publicity </li></ul></ul><ul><ul><li>Sales Promotion </li></ul></ul>C Product Place Price Promotion
  55. 55. Competitors Marketing Intermediaries Publics Suppliers Demographic- Economic Environment Technological- Natural Environment Political- Legal Environment Social- Cultural Environment The Marketing Process Target Consumers Product Place Price Promotion Marketing Implementation Marketing Planning Marketing Control Marketing Analysis
  56. 56. A Simple Model of the Marketing Process Create value for customers and build customer relationships Capture value from customers in return Understand the marketplace and customer needs and wants Capture value from customers to create profits and customer equity Design a customer-driven marketing strategy Build profitable relationships and create customer delight Construct a marketing program that delivers superior value
  57. 57. Customer Relationship Management (CRM) <ul><li>The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction </li></ul><ul><li>Customer Perceived Value </li></ul><ul><ul><li>Customer’s evaluation of the difference between all the benefits and all the costs of a marketing offer relative to those of competing offers </li></ul></ul><ul><li>Customer Satisfaction </li></ul><ul><ul><li>Extent to which a product’s perceived performance matches a buyer’s expectations </li></ul></ul><ul><ul><li>Actual performance > expectations  satisfied </li></ul></ul>
  58. 58. A Simple Model of the Marketing Process Create value for customers and build customer relationships Capture value from customers in return Understand the marketplace and customer needs and wants Capture value from customers to create profits and customer equity Design a customer-driven marketing strategy Build profitable relationships and create customer delight Construct a marketing program that delivers superior value
  59. 59. Customer Loyalty and Profitability <ul><li>Customer Lifetime Value (CLV) </li></ul><ul><ul><li>The value of the entire stream of purchases that the customer would make over a lifetime of patronage </li></ul></ul><ul><li>Share of Customer </li></ul><ul><ul><li>The share of a company gets of the customer’s purchasing in their product categories </li></ul></ul><ul><li>Customer Equity </li></ul><ul><ul><li>The total combined customer lifetime values of all of the company’s customers </li></ul></ul>
  60. 60. Customer Relationship Groups Projected loyalty High Profitability Low Long-term customers Short-term customers Good fit between company’s offerings and customer’s needs; high profit potential Limited fit between company’s offerings and customer’s needs; low profit potential Little fit between company’s offerings and customer’s needs; lowest profit potential Good fit between company’s offerings and customer’s needs; highest profit potential Strangers Butterflies True Friends Barnacles
  61. 61. Marketing in Action To keep customers coming back, Stew Leonard’s has created the “Disneyland of dairy stores.” Focus on Customer Lifetime Value
  62. 62. Let’s apply <ul><li>Companies measuring customer lifetime value determine the potential profit from the stream of purchases a customer makes throughout a lifetime of patronage. </li></ul><ul><li>When banks began tracking the profitability of individual customers, some found that a subset of their customers actually cost them money, rather than generating profits. </li></ul><ul><ul><li>Should banks “fire” their unprofitable customers? </li></ul></ul><ul><ul><li>What are the consequences of such an action? </li></ul></ul><ul><ul><li>How might considering the lifetime value of a customer impact a bank’s perspective on these customers? </li></ul></ul><ul><ul><li>How might eliminating unprofitable customers affect a bank’s customer equity both positively and negatively? </li></ul></ul>
  63. 63. So, What is Marketing? Pulling it all together….
  64. 64. A Simple Model of the Marketing Process
  65. 65. A Simple Model of the Marketing Process Create value for customers and build customer relationships Capture value from customers in return Understand the marketplace and customer needs and wants Capture value from customers to create profits and customer equity Design a customer-driven marketing strategy Build profitable relationships and create customer delight Construct a marketing program that delivers superior value
  66. 66. Expanded Model of the Marketing Process
  67. 67. New Marketing Landscape <ul><li>Rapid Globalization </li></ul><ul><li>Ethics and Social Responsibility </li></ul><ul><li>Not-for-Profit Marketing </li></ul><ul><li>New World of Marketing Relationships </li></ul>
  68. 68. <ul><li>Define marketing and the marketing process. </li></ul><ul><li>Explain the importance of understanding customers and identify the core marketplace concepts. </li></ul><ul><li>Identify the elements of a customer-driven marketing strategy and discuss the marketing management orientations. </li></ul><ul><li>Discuss customer relationship management and creating value for and capturing value from customers. </li></ul><ul><li>Describe the major trends and forces changing the marketing landscape. </li></ul>Rest Stop: Reviewing the Concepts

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