Needs – NOT invented by marketers. They are a basic parts of human makeup: states of felt deprivation including physical needs for food, social needs for belonging and individual needs for self-expression. E.g. I am thirsty.
Wants - form that a human need takes as shaped by culture and individual personality. E.g. I want a coca-cola.
Demands - human wants backed by buying power. E.g. I have money to buy a coca-cola.
Focuses on needs/ wants of target markets & delivering satisfaction more effectively & efficiently than competitors
Total customer satisfaction
Procter & Gamble, Marriot, Nordstrom, L.L.Bean
Overlook conflicts between consumer short-run wants and long-run welfare
Selling vs. Marketing Concepts Contrasted Starting Point Focus Means Ends The Selling Concept: inside-out The Marketing Concept: Outside-in Factory Existing Products Selling and Promoting Profits through Sales Volume Market Customer Needs Integrated Marketing Profits through Customer Satisfaction
Marketing Management Philosophies (5) Society (Human Welfare) Consumers (Wants) Company (Profits) Societal Marketing Concept Fast-food industry: high in fat and salt; packages lead to waste & pollution Johnson & Johnson: supporting many community and employee programs recalled cyanide-laced Tylenol costing $240 million
How do Consumers Obtain Products and Services?
Exchanges - act of obtaining a desired object from someone by offering something, such as money, another good, or a service, in return.
Transactions - trade of values between parties: one party gives X to another party and gets Y in return. A transaction is marketing’s unit of measurement.
Relationship Marketing – the process of creating, maintaining, and enhancing strong, value-laden relationships with customers and other stakeholders.
The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.
Customer Relationship Levels
Basic Relationships with Low –margin customers
Full Partnership with high-margin customers
Customer Loyalty and Retention Programs
Adding financial benefits: frequent flier program
Adding financial benefits + social benefits: “Swatch: the Club”
Adding financial benefits + social benefits + Structural Ties: FedEx
From Database Marketing to Customer Relationship Management (CRM)
Customer Relationship Management has been defined narrowly as a customer data management activity.
Attract new customers, and create transactions with them
Retain current customers, and build profitable, long-term relationships with current customers
Customer profitability analysis to weed out losing customers and target winning ones.
Connecting with customers more directly.
Customer Relationship Groups Short-term Customers Long-term Customers High- Profit Low- Profit Butterflies Good fit between company’s offerings and customers’ needs; High profit potential True Friends Good fit between company’s offerings and customers’ needs; Highest profit potential Strangers Little fit between company’s offerings and customers’ needs; Lowest profit potential Barnacles Limited fit between company’s offerings and customers’ needs; Low profit potential
Return on Marketing Investment (ROMI) from reading: “Drive ROMI by Tying Brand Equity to Consumers”