3. • American Marketing Association’s new
official definition of marketing released
August 2007:
–Marketing is the activity, set of institutions,
and processes for creating, communicating,
delivering, and exchanging offerings that
have value for customers, clients, partners,
and society at large.
4. • Kotler & Keller’s definition of marketing
management:
– The art and science of choosing target markets
and getting, keeping, and growing customers
through creating, delivering, and communicating
superior customer value.
5. Value, Value, Value
• Successful products and services deliver value
and satisfaction to customers
– We make buying decisions based on which
product is perceived to offer the most value
– Tangible/Intangible benefits vs. cost
6. How do we create customers?
– Identifying customer needs
– Designing goods and services that meet those
needs
– Communicate Information about those goods and
services to prospective buyers
– Making the goods or services available at times
and places that meet customers’ needs
– Pricing goods and services to reflect costs,
competition, and customers’ ability to buy
– Providing for the necessary service and follow-up
7. How do we create VALUE?
• Identify the needs in the marketplace
• Find out which needs the organization can
profitably serve
• Design goods and services that meet those
needs
• Developing a marketing mix that will convert
potential customers into actual customers
• Providing for the necessary service and follow-
up after the service
10. From transaction-based marketing to
relationship marketing…
• Transaction–based marketing (Simple
exchanges)
• Relationship marketing
–Lifetime value of a customer
–Converting new customers to advocates
11. Transaction vs. Relationship Marketing
Criteria for differentiation Transaction Marketing Relationship Marketing
World View Managing a company’s
product portfolio, setting &
modifying marketing mix
parameters to achieve
optimal 4P configuration
Managing a company’s
customer portfolio, building
long term business
relationships
Assessment horizon Short-duration Long-duration
Key concepts 4Ps, segmentation, branding,
etc
Interaction, relationships and
networks
Marketing Focus Product/service Product, service and customer
Marketing goal customer acquisition customer acquisition, customer
retention, customer recovery
Marketing strategy Presentation of outcome dialogue
Marketing interaction One-way communication,
formal market studies
Interactive communication,
mutual learning & adaptations
Promotion strategy Non personal advertising,
brand and image
management
Through personal interaction,
developing identity as a
reliable supplier in a network
12. Definition of Relationship Marketing
Berry
1983
attracting, maintaining and enhancing customer
relationships
GrÖnro
os
1992
The goal of relationship marketing is to establish,
maintain and enhance relationships with customers
and other parties at a profit so that the objectives of
the parties involved are met
Shani &
Chalasa
ni 1992
RM is an integrated effort to identify, maintain and
build up a network with individual consumers and to
continuously strengthen the network for the mutual
benefit of both sides, through interactive,
individualised and value-added contacts over a long
period of time
13. Definition of Relationship Marketing
MÖLLER
1992
Marketing is of understanding, creating, and
managing exchange relationships between economic
parties; manufacturers, service providers, various
channel members and final consumers
GrÖnroos
1994
Marketing is establish, maintain, enhance and
commercialize customer relationships so that the
objectives of the parties involved are met. This is
done by a mutual exchange and fulfillment of
promises
Morgan
and Hunt
1994
RM refers to all marketing activities directed towards
establishing, developing and maintaining successful
relational exchange
14. Definition of Relationship Marketing
Sheth &
Parvatyar
1995
RM is a marketing orientation that seeks to
develop close interactions with selected
customers, supplier and competitors for value
creation through cooperative and collaborative
efforts
Gummesson
1996
RM is marketing seen as relationships, networks
and interaction
Parvatyar &
Sheth 2000
RM is the ongoing process of engaging in
cooperative and collaborative activities and
programs with immediate and end-user
customers to create or enhance mutual economic
value, at reduced cost
15. Dimensions of Relationship Marketing
• Stakeholder orientation
• Decision orientation
• Time-horizon orientation
• Value orientation
16. Let’s take a step back…
• Although it is very important to try to build
relationships with customers to ensure LT
success
• But, it is just as important to determine which
consumers we want this relationship with!!
– Target Market
– “Costly” Consumers
17. Customer Relationship Management
(CRM)
The combination of strategies and tools that
drive relationship programs, re-orientating the
entire organization to a concentrated focus on
satisfying customers
18. Strategies for Building Customer
Relationships
• Affinity Programs
– a marketing effort sponsored by an organization
that solicits responses from individuals who share
common interests and activities
19. Strategies for Building Customer
Relationships
• Frequency Marketing
– frequent-buyer or user marketing programs that
reward customers with cash, rebates,
merchandise, or other premiums
20. Strategies for Building Customer
Relationships
• Database Marketing
– software that analyzes marketing information,
then identifies and targets messages toward
specific groups of potential customers
21. Strategies for Building B2B
Relationships
• Strategic alliance
– a partnership formed to create a competitive
advantage
– These more formal long-term partnership
arrangements improved each partner supply-
chain relationships and enhance flexibility
22. Strategies for Building B2B
Relationships
• Electronic Data Interchange (EDI)
– involves computer-to-computer exchanges of
invoices, orders, and other business documents
• Vendor Managed Inventory (VMI)
– is an inventory-management system in which the
seller–based on existing agreement with a buyer–
determines how much of a product is needed
23. Strategies for Building B2B
Relationships
• Database Marketing
– software that analyzes marketing information,
then identifies and targets messages toward
specific groups of potential customers
24. Evaluating Relationships
• Lifetime Value (LTV)
–Refers to the net present value of the
potential revenue stream for any particular
customer over a # of years
–Starts with current purchase activity then
extrapolates to include potential additions
from cross-selling, upgrades, total
ownership, etc.
25. Building Buyer-Seller Relationships
• Many customers are seeking ways to simplify their
lives, and relationships provide a way to do this
• Customers find comfort with brands that have
become familiar through their ongoing relationships
with companies or when they feel like they can relate
to a company
– Dove’s Campaign for REAL Beauty
• Such relationships often lead to more efficient
decision-making customers and higher levels of
customer satisfaction
26. The Value of Customer Retention
• On average, it costs over 10 TIMES more to
acquire a new customer versus retain an
existing one
• A 5% gain in customer retention can result in
an 80% gain in profits.