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Managing Profitable Customer Relationships

Published in: Economy & Finance, Business
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  1. 1. Marketing: Managing Profitable Customer Relationships
  2. 2. Some interpretations about marketing <ul><li>A specialized function within the organization that co-exists with other functions such as HR, Finance and Operations </li></ul><ul><li>A collection of activities such as marketing research, advertising, public relations, etc. </li></ul><ul><li>An organizational mindset </li></ul>Which view is correct and why so?
  3. 3. 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>
  4. 4. Marketing Old vs. New <ul><li>Old view of marketing: </li></ul><ul><li>Making a sale -- “Telling and Selling” </li></ul>New view of marketing: Satisfying customer needs
  5. 5. 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>
  6. 6. A Simple Model of the Marketing Process Note: These stages guide our thinking about what marketing is, what it represents in essence. The chapters in the text are built around these themes. Figure 1.1
  7. 7. Different perspectives of “Marketing in Asia” Figure 1.2
  8. 8. Needs, Wants, & Demands <ul><li>Need: State of felt deprivation including physical, social, and individual needs. </li></ul><ul><li>Physical: </li></ul><ul><ul><li>Food, clothing, shelter, safety </li></ul></ul><ul><li>Social: </li></ul><ul><ul><li>Belonging, affection </li></ul></ul><ul><li>Individual: </li></ul><ul><ul><li>Learning, knowledge, self-expression </li></ul></ul>
  9. 9. <ul><li>Wants: Form that a human need takes, as shaped by culture and individual personality. </li></ul><ul><li>Wants + Buying Power = Demand </li></ul>Needs, Wants, & Demands
  10. 10. Need / Want Fulfillment <ul><li>Needs and Wants 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>
  11. 11. Core Marketing Concepts Figure 1.3
  12. 12. What Satisfies Consumers’ Needs and Wants? Products Anything that can be Offered to a Market to Satisfy a Need or Want Persons Places Organizations Ideas Information Services Activity or Benefit Offered for Sale That is Essentially Intangible and Does Not Result in the Ownership of Anything
  13. 13. Marketing Myopia <ul><li>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>
  14. 14. Value and Satisfaction If performance is lower than expectations, satisfaction is low. If performance is higher than expectations, satisfaction is high. Expectation Performance 8 10 Expectation Performance 10 8
  15. 15. Exchange vs. Transaction <ul><li>Exchange: </li></ul><ul><ul><li>Act of obtaining a desired object from someone by offering something in return . </li></ul></ul><ul><li>Transaction : </li></ul><ul><ul><li>A trade of values between two parties. </li></ul></ul><ul><ul><li>One party gives X to another party and gets Y in return. Can include cash, credit, or check. </li></ul></ul>
  16. 16. 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>
  17. 17. Elements of a Modern Marketing System Figure 1.4
  18. 18. 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>
  19. 19. Segmentation and Target Marketing #1 #2 Market Segmentation: Divide the market into segments of customers Target Marketing: Select the segment to cultivate
  20. 20. Marketing Management Finding and increasing demand, also changing or reducing demand, such as in demarketing. Demand Management Temporarily or permanently reducing the number of customers or shifting their demand. Demarketing
  21. 21. Marketing Management Philosophies Production Concept Product Concept Selling Concept Marketing Concept Societal Marketing Concept Customer-Driven
  22. 22. Figure 1.5 The Four Elements of the Marketing Concept
  23. 23. Marketing and Sales Concepts Contrasted Figure 1.6
  24. 24. Customer-Driven Marketing How many of us would have thought to ask for a “wearable” PC? Marketers must often understand customer needs even better than customers themselves do.
  25. 25. Societal Marketing Concept Figure 1.7
  26. 26. The Marketing Philosophies Compared Figure 1.8
  27. 27. The Marketing Mix Customer Needs Product Price Promotion Distribution
  28. 28. Customer Relationship Management <ul><li>The process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. </li></ul>
  29. 29. Customer Perceived Value <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>
  30. 30. Customer Perceived Value Is FedEx’s service worth the higher price? FedEx thinks so. It promises reliability, speed, and peace of mind. FedEx ads say “Need to get it there or else? Don’t worry. There’s a FedEx for that.”
  31. 31. Customer Satisfaction <ul><li>Dependent on the product’s perceived performance relative to a buyer’s expectations. </li></ul>
  32. 32. Customer Relationship Levels Basic Relationship Full Partnership Continuum
  33. 33. The Three Approaches to Customer Relationship Building Figure 1.9
  34. 34. Partner Relationship Marketing <ul><li>Partners Outside the Firm </li></ul><ul><li>Supply chain management </li></ul><ul><li>Strategic alliances </li></ul><ul><li>Partners Inside the Firm </li></ul><ul><li>All employees customer focused </li></ul><ul><li>Teams coordinate efforts toward customers </li></ul>
  35. 35. <ul><li>Customer Lifetime Value </li></ul><ul><ul><li>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 a company gets of the customers purchasing in their product categories. </li></ul></ul>Customer Loyalty & Retention
  36. 36. Customer Lifetime Value To keep customers coming back, Stew Leonard’s has created the “Disneyland of dairy stores.” Rule #1 — the customer is always right. Rule #2 —if the customer is ever wrong, reread Rule #1.
  37. 37. Customer Equity <ul><li>Customer equity is the total combined customer lifetime values of all the company’s customers. </li></ul>
  38. 38. Customer Relationship Groups Figure 1.10
  39. 39. The Internet <ul><li>The Internet has been hailed as the technology behind a New Economy. </li></ul><ul><li>Marketing applications include: </li></ul><ul><ul><li>“ Click-and-mortar” companies </li></ul></ul><ul><ul><li>“ Click-only” companies </li></ul></ul><ul><ul><li>Business-to-business e-commerce </li></ul></ul><ul><li>Business-to-business transactions online are expected to reach $4.3 trillion in 2005. </li></ul><ul><li>By 2005, 500,000 companies will use the Internet to do business. </li></ul>
  40. 40. Figure 1.11 An Expanded Model of the Marketing Process