Marketing concept

1. Marketing Concepts:
Managing Profitable Customer
Relationships

2. Market & Product
 A market is the set of actual and potential
buyers of a product. These buyers share a
particular need or want that can be satisfied
through exchange relationships.
 Product (Marketing Offer): physical product,
service, information, experience, person,
place, organization, and ideas.

3. Examples of Product

4. Definition of Marketing
 Marketing is the process of planning and
executing the conceptions, pricing, promotion
and distribution of ideas, goods, and services
to create exchanges that satisfy individual
and organizational goals.
 Marketing is meeting needs profitably.

5. Marketing Philosophy
 The Production Concept
 The Product Concept
 The Selling Concept
--------------------------------------------------------
 The Marketing Concept
 The Customer Concept
 The Societal Marketing Concept

6. The Production Concept
 Consumers will prefer products that are
widely available and inexpensive.
 Focus: achieving high production efficiency,
low costs, and mass distribution.
 It is useful when (1) the demand for a product
exceeds the supply; (2) the product’s cost is
too high.
 Examples: Standard Raw Materials and
Components, CD, LCD.

7. The Product Concept
 Consumers will favor those products that
offer the most quality, performance, or
innovative features.
 Focus: making superior products and
improving them over time.
 Examples: Digital Camera, CPU.
 Better Mousetrap Fallacy
 Marketing Myopia. (Theodoes Levitt, 1965)

8. The Selling Concept
 Consumers and businesses, if left alone, will
ordinarily not buy enough of organization’s
products.
 Focus: undertake an aggressive selling and
promotion effort.
 Examples: unsought goods: encyclopedias,
funeral plots, foundations.

9. The Marketing Concept
 The key to achieving its organizational goals
consists of the company being more effective than
competitors in creating, delivering, and
communicating superior customer value to its
chosen target markets.
 Slogans, We do it all for you (Toyota).
 Four pillars: target market, customer needs,
integrated marketing and profitability.

10. Contrasts Between the Sales Concept and the
Marketing Concept

11. The Customer Concept

12. The Societal Marketing
Concept
 The organization’s task is to determine the needs,
wants, and interests of target markets and to deliver
the desired satisfactions more effectively and
efficiently than competitors in a way that preserves
or enhances the consumer’s and society’s well-
being.
 Examples: Body Shop; HSBC; Johnson &
Johnson’s Tylenol

13. Needs, Wants and Demands
 Needs : the basic human requirements.
 Physical: food, clothing, shelter, safety
 Social: belonging, affection
 Individual: learning, knowledge, self-expression
 Wants when needs are directed to specific
objects that might satisfy the need.
 Demands : wants for specific products
backed by an ability to pay.

14. Demand States and Marketing
Tasks
 Marketing managers are responsible for
demand management.
 Negative Demand → Counter Marketing, e.g.
insurance.
 No Demand → Stimulus, e.g. encyclopedias.
 Latent Demand → Developing, e.g. iPod
 Declining Demand → Remarketing, e.g. Arm &
Hammer’s baking soda → deodorizer; school.

15. Demand States and Marketing
Tasks
 Marketing managers are responsible for
demand management.
 Irregular Demand → Synchromarketing e.g. ice
cream; museum.
 Full Demand → Maintain Marketing
 Overfull Demand → Demarketing e.g. Mister
Donut
 Unwholesome Demand → Social Marketing, e.g.
cigarettes; drunk-driving.

16. Customer Relationship
Management (CRM)
 The overall process of building and
maintaining profitable customer relationships
by delivering superior customer value and
satisfaction.
 On average, it costs 5 to 10 times as much to
attract a new customer as it does to keep a
current customer satisfied.

17. Customer Perceived Value
 The difference between total customer value
and total customer cost.
 Value chain, e.g. Wal-Mart.
 Value-delivery network, e.g. Honda.

18. Customer Lifetime Value and
Equity
 Customer lifetime value: the value of the
entire stream of purchases that the customer
would make over a lifetime of patronage.
 Customer equity: the total combined
customer lifetime values of all of the
company’s customers.

19. Selective Relationship
Management
 Weed out losing customers and target
winning ones for pampering.
 Examples: Citibank; First Chicago Bank;
Fidelity Investment.
 Risk: future profits are hard to predict.

20. Customer Relationship Groups
Profitability
Projected loyalty
High
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

21. Share of Customer
 The portion of the customer’s purchasing in
its product categories that a company gets.
 Methods to increase share of customer
 Offer greater variety to current consumers
 Train employees to cross-sell and up-sell in order
to market more products and services to existing
customers.
 Amazon: books, music, videos, gifts, toys,
consumer electronics, office products, and so
on.

22. Customer Satisfaction
 The extent to which a product’s perceived
performance matches a buyer’s expectation.
 Smart companies aim to delight customers by
promising only what they can deliver, then
delivering more than they promise.
 Examples: Lexus; Southwest Airlines;
Seasons Hotels; Nordstrom department store.

23. Satisfying Customer Complaints
 Rate of dissatisfaction: 25%; rate of
complaint in dissatisfaction: 5%.
 50% of complaints report a satisfactory
problem resolution.
 Examples: Williams-Sonoma; Enterprise
Rent-A-Car.
 On average, satisfied →3 people, and
dissatisfied → 11 people.

24. Satisfying Customer Complaints
 Rate of complainant repurchase
Resolved Resolved
quickly
Major
complaints
34% 52%
Minor
complaints
52% 95%

25. Customer Relationship Levels
and Tools
 Level of relationship: basic＜ reactive (e.g.
P&G)＜accountable＜proactive＜partnership
(e.g. Boeing).
 Tools:
 Add financial benefits, ex. frequent-flier program.
 Add social benefits, ex. club marketing program.
 Add structural ties, ex. McKesson; FedEx.