how to manage good relations with customers

2. Chapter One
Marketing: Managing Profitable
Customer Relationships
PREPARED BY
UMAIR

3. Looking Ahead
• Define marketing and the marketing processes.
• Explain the importance of understanding
customers and the marketplace.
• Identify the five core marketplace concepts.
• Identify the key elements of a customer-driven
marketing strategy.
• Discuss customer relationship management
and ways of creating and obtaining value.
• Describe the major trends and forces changing
today’s marketing landscape.

4. What is Marketing?
• Attracting new customers by promising
and delivering superior value.
• Building long-term relationships with
customers by delivering continued
customer satisfaction.
• Creating, building and managing these
relationships profitably over time.

5. • Broad Definition:-
Marketing is a social and managerial
process by which individuals and groups
obtain what they need and want through
creating and exchanging value with
others.
• Narrower Definition:-
The process by which companies create
value for customers and build strong
customer relationships in order to capture
value from customers in return.

6. The Marketing Process Model
1. Understand the marketplace and customer
needs and wants.
2. Design a customer-driven marketing strategy.
3. Construct a marketing program that delivers
superior value.
4. Build profitable relationships and create
customer delight.
5. Capture value from customers to create
profits and customer equity.

7. 1.Understanding The Marketplace
And The Consumer Needs

8. Needs, Wants and Demands
• Needs are states of felt deprivation.
–Physical:
• Food, clothing, shelter, safety.
–Social:
• Belonging, affection.
–Individual:
• Learning, knowledge, self-expression.

9. Needs, Wants and Demands
• Wants are needs shaped by culture and
individual personality.
– Jeans vs a sari.
– Individual expression vs. collective good.
• Demands are wants combined with
buying power.
– Hilfiger vs. Giant Tiger.
– Jetta vs. Jaguar.

10. Products, Services, Experiences
• Products.
– Anything that can be offered for.
– Acquisition, attention, use or consumption.
– That might satisfy a need or want.
• Services.
– Activities or benefits offered.
– Essentially intangible.
– Do not result in ownership of anything.
• Experiences.
– Create, stage and market brand experiences.
– Attending live theatre, music concert.

11. Marketing Myopia
• Sellers pay more attention to the specific
products they offer than to the benefits and
experiences produced by the products.
• They focus on the “wants” and lose sight of the
“needs.”
– The great railroads lost out to the exploding trucking
industry.
– They forgot that their business was solving
transportation problems, not running railroads.

12. 12
How Do Consumers
Choose Among Offers?
 Customer ValueCustomer Value – Difference between the values
the customer gains from owning the product versus the
costs of obtaining it. Customers buy from the firm that
offers the highest customer perceived value
 Customer SatisfactionCustomer Satisfaction – Perceived
performance in providing value, relative to expectations
– how well the product lives up to expectations
Important:Important: Perceptions are keyPerceptions are key
Set the right level of expectationSet the right level of expectation

13. Value and Satisfaction
• If the performance and the customer’s
experience is lower than expectations,
than customer satisfaction is low.
• If the performance and the customer’s
experience meets expectations, than the
customer is satisfied.
• If the performance and the customer’s
experience exceeds expectations, than
the customer is delighted.

14. Exchange and Transactions
• Exchange.
– The act of obtaining a desired object from
someone by offering something in return.
• Transaction.
– A trade between two parties that involves:
• two things of value.
• agreed upon conditions.
• time of agreement.
• place of agreement.

15. What is a Market?
• The set of actual and potential buyers of
a product.
• These people share a need or want that
can be satisfied through exchange
relationships.

16. Core Marketplace Concepts
• Customers have needs, wants and
demands.
• Marketers offer products or services.
• Customers seek value and satisfaction
from offers.
• Demands and offers result in
transactions and relationships.
• Markets are all potential customers with
a similar demand.

17. Customer-Driven Marketing
• Divide markets into segments.
• Choose the right segment to target.
• Offer a unique value proposition.
• Differentiate your offer from competitor
offers.
• Build customer value and satisfaction.
• Nurture long-term customer
relationships.

18. Figure 1.2
ELEMENTS OF A MODERN
MARKETING SYSTEM

19. 2.Designing A Customer
Driven Marketing Strategy

20. Marketing Management
The art and science of choosing target
markets and building profitable
relationships with them.

21. Selecting Customers To Serve
• The company must decide who it will
serve. It does this by dividing the market
into segments of customers (market
segmentation) and selecting which
segment it will go after (target marketing)
• Segmentation divides the market into
groups of customers with varying needs
and wants.
• Targeting selects the right segment to
nurture.

22. Connections With Customers
• Most marketers are
targeting fewer, potentially
more profitable, customers
• They are asking:
– Can we serve this customer
profitably?
• Focus has shifted to:
– Retaining current customers
– Connecting in a deeper, more
lasting way – growing “share
of customer”
– Building relationships for
greater profitability

23. Demand Management
• Marketing management seeks to control
demand.
– Increasing demand is the norm.
– Demarketing seeks to reduce demand in
certain circumstances.

24. 24
MarketingMarketing
ManagementManagement
Choosing target
markets and
building
profitable
relationships
with them
Demand
Management
Finding and
increasing demand;
(also changing or
reducing demand,
i.e.,“demarketing”)
Profitable
Customer
Relationships
Attracting new
customers, and
retaining and
building
relationships
with current
customers
Marketing Management

25. Value Proposition
The set of benefits or values the company
promises to deliver to its target markets
to satisfy their needs.

26. Marketing Management Orientations
• Marketing Management wants to design
strategies that will build profitable
relationships with target consumers
• There are five alternative concepts under
which organizations design and carry out
there marketing strategies. These are:-
1. The Production Concept
2. The Product Concept
3. The Selling Concept
4. The Marketing Concept
5. The Societal Marketing Concept

27. 27
Production Concept
Product Concept
Selling Concept
Marketing Concept
Societal Mktg. Concept
• Consumers favor products that are
available and highly affordable
• Consumers favor products that offer
the most quality, performance, and
innovative features
• Consumers will not buy enough unless
the firm undertakes large-scale selling
and promotion efforts
• Focuses on knowing the needs and wants
of target markets and delivering
satisfactions better than competitors
• Focuses on the needs and wants of target
markets and on maintaining or improving
customer and societal well-being
Marketing Management
Orientations
Based on different assumptions about:
- what customers want
- what marketers should do

28. 28
1.Production Concept
Demand > Supply; High Costs
(Still appropriate under these limited circumstances) (p. 12)
 Consumers Favor:
 Widely available
 Highly affordable
 Management’s Focus: “engineer”“engineer”
 Improving production efficiency
 Improving distribution efficiency
 DANGER: Marketing MyopiaDANGER: Marketing Myopia
 Focuses too narrowly on company operations, not on
customer needs/wants
 Company “falls in love” with its operations, not with its
customers

29. 29
2.Product Concept
(p. 12)
 Consumers Favor:
 Quality, performance, innovative features
 Management’s Focus: “inventor”“inventor”
 Making superior products (“build a better
mousetrap”)
 Continuous product improvements
 DANGER: Marketing MyopiaDANGER: Marketing Myopia
 Focuses too narrowly on physical products, not on underlying
customer needs/wants
 Company “falls in love” with its products, not with its
customers
 Makes products that customers don’t care about (don’t
need/want)


30. 30
Selling Concept
(May be appropriate for “unsought products”) (p. 12)
 Consumers Favor:
 Not buying, or not buying enough
 Management’s Focus: “hard sell“hard sell
salesperson”salesperson”
 Large-scale selling and promotion effort
 Coaxing and pushing people to buy
 DANGER:DANGER: “Sell what you can make”“Sell what you can make”
(versus “make what you can sell”)(versus “make what you can sell”)
 Most customers who are dissatisfied do not buy again
 Most customers who are dissatisfied spread bad word-of-

31. 31
Marketing Concept
(pp. 12-13)
 Consumers Favor:
 Products that satisfy their wants and needs
 Management’s Focus: “customer centered”“customer centered”
 Understanding needs and wants of customers
– what they need/want the product to do for
them
 Underlying and latent needs as well as stated
needs
 Delivering desired satisfactions better than
competitors do
 NOTE: “better than competitors” – keeps best of theNOTE: “better than competitors” – keeps best of the
production and product conceptsproduction and product concepts

32. 32
Marketing and Selling
Concepts Contrasted
(Fig. 1.3, pp. 12-13)
Factory
Existing
products
Selling
and
promoting
Profits
through
sales volume
The Selling Concept (“inside-out”)The Selling Concept (“inside-out”)
Starting
Point Focus Means Ends
Market
Customer
needs
Integrated
marketing
Profits through
customer
satisfaction
The Marketing Concept (“outside-in”)The Marketing Concept (“outside-in”)

33. 33
5.Societal Marketing Concept
 A Principal of enlightened marketing
that holds that a company should make
good marketing decisions by
considering consumer wants, the
company's requirements, consumers
long run interests and society’s long run
interests.

34. 34
Societal Marketing Concept
Societal
Marketing
Concept
Societal
Marketing
Concept
CompanyCompany
(Profits)
ConsumersConsumers
(Short-term want
satisfaction)
SocietySociety
(Long-term consumer & societal welfare)
Maintain & improveMaintain & improve
long-term well-beinglong-term well-being
Social responsibilitySocial responsibility
Be ethicalBe ethical
Do good:Do good:
• customer-
oriented,
• environment,
• innovative (real,
valued) product
improvements
• sense-of-higher-
mission, give
back
Stop doing badStop doing bad 

35. 3.Preparing A Marketing Plan
And Program

36. • The company's marketing strategy
outlines which customers the company
will serve and how it will create value for
these customers.
• Next the marketer constructs a marketing
program that will actually deliver the
intended value to the target customers.
• The marketing program builds customer
relationships by transforming the
marketing strategy into action. It consists
of the firms Marketing mix.

37. The Marketing Mix
• The marketing mix is the set of
marketing tools the firm uses to
implement its marketing strategy.
• The major marketing mix tools are
classified into four broad groups, called
the four Ps of marketing. These are:-
1. Product
2. Price
3. Place
4. Promotion

38. Marketing Mix (contd.)
To deliver on its value proposition, the firm
must:
• Create a need-satisfying marketing offer
(Product)
• Decide how much it will charge for the
offer (Price)
• How it will make the offer available to the
target consumers (Place)
• How it will communicate with target
customers about the offer and persuade
them of its merits (Promotion)

39. 4. Building Customer
Relationships

40. Relationship Marketing
• Customer relationship management.
The process of building and
maintaining profitable customer
relationships by delivering superior
customer value and satisfaction.

41. Relationship Building Blocks:
Customer Value and Satisfaction
• The key to building lasting customer
relationships is to create superior
customer value and satisfaction.
Satisfied customers are more likely
to be loyal customers and to give the
company a larger share of their
business

42. The Customer’s Experience
• Customer perceived value.
– Customer’s subjective view of the offer’s value
compared to competitive offers.
• Customer satisfaction.
– Customer’s subjective view of the value received in
return for the purchase price.
• Customer delight.
– Customer’s subjective view of the increased
value received above the purchase price.

43. 43
Customer Satisfaction
Expectations are largely based on marketer
information and promises – must create
realistically high expectations
Reality = satisfaction has beenReality = satisfaction has been
decliningdeclining
Performance
falls short of
expectations
P < E
Customer is
dissatisfied
Performance
matches
expectations
P = E
Customer is
satisfied
Performance
exceeds
expectations
P > E
Customer is
highly
satisfied
or
delighted !
Satisfaction = Performance (P) – ExpectationSatisfaction = Performance (P) – Expectation
(E)(E)

44. Customer Relationship Levels and
Tools
• Companies can build customer
relationships at many levels, depending
upon the nature of the target market.
• At one extreme a company with many
low margin customers may seek to
develop basic relationships with the
customers. For example proctor &
gamble does not phone or call on all of
its customers to get to know the
personally.

45. Customer Relationship Levels and
Tools (continued)
• At the other extreme, in markets with
few customers and high margins,
sellers want to create full
partnerships with key customers. For
example proctor & gamble teams
work closely with Wal-mart

46. The Changing Nature of Customer
Relationship
Relating With More Carefully Selected
Customers
• Today most marketers realize that they do
not want relationships with every customer.
Instead companies are now targeting fewer
more profitable customers.
• Many companies now use customer
profitability analysis to weed out losing
customers and target winning ones for
pampering.

47. Relating for the Long-Term
• Just as companies are being more selective
about which customers they can choose to
serve they are serving chosen customers in
a deeper more lasting way
Relating Directly
• Beyond connecting more deeply with their
customers, many companies are also
connecting more directly.
• Direct marketing is booming. Consumers
can now buy virtually any product with out
going to the store – by telephone, mail-order
catalogs and online.

48. Partner Relationship Management
• Working with partners in other company
departments and outside the company to
jointly bring greater value to the
customers.
– Every department in an organization
contributes to customer satisfaction.
– Suppliers are carefully controlled through
supply chain management.
– Strategic alliances create new opportunities
to delight customers.

49. 5.Capturing Value from
Customers

50. Creating Customer Loyalty And
Retention
• Good Customer relationship management
creates customer delight.
• In turn delighted customers remain loyal to
the company and its products.
• Thus the aim of customer relationship
management is to create not just customer
satisfaction, but customer delight.
Customer lifetime value.
• The value of the entire stream of
purchases that the customer would make
over a lifetime of patronage.

51. Capturing Value In Return
• Share of customer.
– Share of customer is the percentage of
customers that buy a company’s product of
all customers purchasing in that product
category.
– Companies continuously strive to grow their
share of customer.
– Creating brand extensions is a favoured
method of growing share of customer.

52. Building Customer Equity
• The total combined customer lifetime
value of all of the company’s customers.
• Often a more accurate measure of a
company’s value than sales or market
share.
• Combination of market share, share of
customer and lifetime customer value.

53. Customer Relationship Groups
• Targeting the right customers at the right
time.
– Butterflies have high profitability with low loyalty.
– True Friends have high profitability with high loyalty.
– Strangers have low profitability with low loyalty.
– Barnacles have low profitability with high loyalty.
• Challenge: make the Butterflies more loyal
and make the Barnacle more profitable.
• Keep the True Friends and “fire” the Strangers.

54. Butterflies
Good fit between
company’s offerings
and customer’s 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 customer’s needs:
lowest profit potential
Barnacles
Limited fit between the
company’s offerings
and customer’s need:
Low profit potential
Short-term Customers Long-term Customers
High
Profitability
Low
Profitability

55. New Marketing Technologies
• Technology has changed how marketers
build value.
– Internet and e-commerce/e-business.
– Fast and global communications.
– Wireless technologies.
– Relational databases.
• Instant, highly targeted communication
with customers and suppliers.

56. New Global Markets
• International trade is the new frontier.
• Export is critical to a country’s economic
growth.
• Difficult decision:
– Delay means risking loss of growing global
markets.
– Proceed means high risk but potentially high
reward.

57. Ethics and Responsibility
• Worldwide consumerism and
environmentalism movements exert.
pressure for greater responsibility
• Notion of “caring capitalism” tied to
societal marketing concepts.
– Seeking ways to make a profit by serving the
best long-run interests of customers and
communities.

58. Not-For-Profit Marketing
• Marketing of ideas, values and
institutions.
• Increasing awareness that these
organizations must build relationships
with constituents and stakeholders.
• Challenge of using new marketing
techniques for not-for-profit initiatives.

59. Looking Back
• Define marketing and the marketing processes.
• Explain the importance of understanding
customers and the marketplace.
• Identify the five core marketplace concepts.
• Identify the key elements of a customer-driven
marketing strategy.
• Discuss customer relationship management
and ways of creating and obtaining value.
• Describe the major trends and forces changing
today’s marketing landscape.

60. NASCAR
60

61. NASCARNASCAR
NASCAR stands for The National
Association for Stock Car Auto Racing. It
is also the largest sanctioning body of
stock car racing in the United States.
61

62. NASCARNASCAR
Key TermsKey Terms
Stock Cars
Stock cars are those cars that are not modified
in any way and are in their original factory
condition.
Stock Car Racing
Stock car racing is a form of automobile
racing found mainly in the United States,
Canada, New Zealand, Great Britain and
Brazil. Traditionally, races are run on oval
tracks measuring approximately ¼ mile to
2.66 miles
62

63. NASCARNASCAR
Key TermsKey Terms
Bootlegging
Bootlegging is the illegal distribution or
production of liquor and other highly taxed
goods.
Prohibition Era
In the history of the United States,
Prohibition, also known as The Noble
Experiment, is the period from 1919 to 1933,
during which the sale, manufacture, and
transportation of alcohol for consumption
were banned nationally as mandated in the
Eighteenth Amendment to the United States
Constitution. 63

64. NASCARNASCAR
History and Origins
• Stock car racing in the United States has
its origin in bootlegging during prohibition
• They would modify their cars for extra
storage capacity and to make them
faster
64

65. NASCARNASCAR
History and Origins
With the passage of time they started
getting together to compete with one
another. This eventually took the form of
planned racing.
65

66. NASCARNASCAR
History and Origins
• There were no rules or fixed tracks. This
problem was identified by William France
who was of the view that a governing
body was needed to regulate these
races.
• He held meetings with influential drivers
and promoters as a result of which
NASCAR was established on February
21, 1948.
66

67. NASCARNASCAR
Beginning of Modern Era
• NASCAR made several changes to its
structure in the early 1970’s such as new
points system and cash benefits to
compete for championship points.
• NASCAR was aired for the first time on
national television.
67

68. NASCARNASCAR
NASCAR Sanctioned Series
• Sprint Cup
• Nationwide Series
• Craftsman Truck Series
• Canadian Tire Series
• Corona Series
• Regional Racing Series
68

69. NASCARNASCAR
Sprint Cup
• It is the sport’s highest level of
professional competition
• This naturally implies that it is the most
popular and most profitable NASCAR
series
69

70. NASCARNASCAR
Nationwide Series
• It is the second highest level of
professional competition in NASCAR
• It is the only series of the top three to
race outside the United States
• Its season has a few races less than the
Sprint Cup and the prize money too is
low
70

71. NASCARNASCAR
Craftsman Truck Series
• It features modified pickup trucks
• It is one of the three national divisions of
NASCAR, together with the Nationwide
Series and the Sprint Cup
• It has with time grown in popularity
71

72. NASCARNASCAR
Canadian Tire Series
• NASCAR purchased Canadian racing
series CASCAR in September 2006
• The CASCAR Western Series is
NASCAR’s fourth-tier series started in
2007
72

73. NASCARNASCAR
Corona Series
• This series began in 2007 in Mexico
73

74. NASCARNASCAR
Regional Racing Series
• NASCAR also operates several other
racing circuits
• Two main racing series are Camping
World Series and Whelen All-American
Series
74

75. NASCARNASCAR
Drivers Safety
It is mandatory for NASCAR drivers to
adopt the necessary safety measures.
Some of the mandatory devices are:
• SAFER Barrier
• Kill Switch
• Fireball
• HANS device (Head and Neck Restraint
System)
75

76. NASCARNASCAR
Success of NASCAR
• It is the second highest rated regular
season on television
• It has about 75 million fans
• Because of such large numbers of fans it
has attracted more than 250 big name
sponsors
• It is earning billions of dollars in revenue
each year
76