1. Marketing: Managing Profitable Customer Relationships
Chapter 1
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Principles of Marketing: 6th Canadian Edition

2. Learning Objectives
After studying this chapter, you should be able to:
Define what marketing is and discuss its core concepts
Define marketing management and compare the five marketing management orientations
Discuss customer relationship management and strategies for building lasting customer relationships
Analyze the major challenges facing marketers heading into the new “connected” millennium
Principles of Marketing: 6th Canadian Edition

3. Opening Vignette: VanCity Credit Union
Founded in 1946 in Vancouver, British Columbia
In 2003: 286,000 members in 39 branches
Credit unions are cooperatives, owned by members
Profits returned as dividends or improved services/prices
Triple bottom line
Measures success by:
Customer satisfaction
Profits
Community impact
Member involvement
Environmental sustainability
Growth in new members
Uses non-traditional marketing tools
Principles of Marketing: 6th Canadian Edition

4. Marketing Defined Marketing: Needs: Wants: Demands:
Social and managerial process
Individuals and groups obtain what they need
Creating and exchanging
Products and values with others
Needs:
Felt deprivation
Wants:
Form of needs shaped by culture and personality
Demands:
Wants backed by buying power
Figure 1.1
Principles of Marketing: 6th Canadian Edition

5. Products, Services, and Experiences
Marketing offer:
Address needs with a value proposition
Set of benefits promised to customers to satisfy needs
Can include:
Products
Services
Persons
Places
Organizations
Information
Ideas
Figure 1.1
Principles of Marketing: 6th Canadian Edition

6. Value and Satisfaction
Benefits gained versus costs of obtaining product
Satisfaction:
Degree of meeting consumer’s expectations
Expectations formed from:
Previous experience
Opinions of others
Marketing information
Competitive information and promises
Satisfied customers buy again and tell others
Dissatisfied customers switch and tell others
Figure 1.1
Principles of Marketing: 6th Canadian Edition

7. Exchange, Transactions, and Relationships
Obtaining a desired object
By offering something in return
Transaction:
Two things of value
Figure 1.1
Agreed-upon conditions
Time/place of agreement
Exchange relationships:
Want to build strong economic and social connections
Consistently delivering superior value
Principles of Marketing: 6th Canadian Edition

8. Marketing Management Market: Marketing management: Demarketing:
A physical place where buyers and sellers gather
Set of actual or potential buyers of a product
Marketing management:
Choosing target markets
Building profitable relationships with them
Demarketing:
Reduce, not destroy demand
Temporarily or permanently
Figure 1.2
Principles of Marketing: 6th Canadian Edition

9. Marketing Management Orientations
Production concept:
Consumers will favour available/affordable products
Focus on improving production/distribution efficiency
Still useful when demand exceeds supply
Product concept:
Consumers favour products with the best:
Quality
Performance
Features
Focus on continuous product improvements
Figure 1.3
Principles of Marketing: 6th Canadian Edition

10. Marketing Management Orientations
Selling concept:
Products need large-scale selling/promotion effort
Focus on the hard sell
Unsought goods, or when company has overcapacity
The marketing concept:
Achieve organizational objectives by
Determining needs and wants of target consumers
Delivering satisfaction
Better than competitors
Figure 1.3
Principles of Marketing: 6th Canadian Edition

11. Societal Marketing Concept
The marketing concept focuses on short-run wants
May be in conflict with consumer long-run welfare
Determine needs/wants of target markets
Deliver desired satisfactions
More efficiently and effectively than competitors
In a way that maintains or improve consumer’s and society’s well-being
Figure 1.4
Principles of Marketing: 6th Canadian Edition

12. Customer Relationship Management
Process of building/maintaining profitable customer relationships
Delivering superior customer value and satisfaction
Customer lifetime value:
Value of the entire purchase stream
Customer makes over a lifetime
Focus on the long-term
Very few new customers, just someone else’s
More efficient to look after your own customers
Than to try to find new ones
Figure 1.5
Principles of Marketing: 6th Canadian Edition

13. Customer Satisfaction and Loyalty
Customer perceived value:
Difference between total customer value
And total customer cost
To the customer, perception is reality
Customer satisfaction:
Extent a product’s perceived performance
Matches expectations
Maximizing customer satisfaction may not be possible or will be cost prohibitive
Figure 1.5
Principles of Marketing: 6th Canadian Edition

14. Customer Satisfaction and Loyalty
Customer loyalty:
Highly satisfied customers are less price sensitive
Speak favourably about the company and products
Remain loyal for longer period of time
Link between satisfaction and loyalty is positive, but
Different for some industries
To the customer, slight changes in satisfaction may trigger switching
Companies need to aim high
Focus on greater “share of wallet”
Figure 1.5
Principles of Marketing: 6th Canadian Edition

15. Building Customer Relationships
Customer equity:
Total combined customer lifetime values
Of all of the company’s customers
Relationship tools:
Levels from developing basic relationships to creating full partnerships
Financial benefits: frequency marketing programs
Social benefits: club marketing
Adding structural ties
Focus on profitable customers
Principles of Marketing: 6th Canadian Edition

16. Today’s Marketing Connections
Figure 1.6
Single theme: connecting
The Internet
One to one marketing
Selective relationship management
Increase share of customer
Partner relationship management
Supply chain management
Strategic alliances
Principles of Marketing: 6th Canadian Edition

17. Marketing Connections in Transition (Table 1.1)
Old marketing thinking:
Sales/product centered…
Practice mass marketing…
Focus on product/sales…
Make sales to customers…
Get new customers…
Grow share of market…
Serve any customer…
Use mass media…
Standardized products…
Sales/marketing responsible for customer satisfaction/value…
Go it alone…
Market locally…
Profit responsibility…
Corporations…
Use marketplaces…
New marketing thinking:
Market/customer centered
Selected market segments
Focus on customer satisfaction/value
Develop customer relationships
Keep old customers
Grow share of customer
Serve profitable customers
Connect with customers directly
Customized products
Enlist all departments to deliver customer satisfaction/value
Partner with others
Market locally and globally
Social/environmental responsibility
Non-profits
Use marketspaces
Principles of Marketing: 6th Canadian Edition

18. In Conclusion… The learning objectives for this chapter were:
Define what marketing is and discuss its core concepts
Define marketing management and compare the five marketing management orientations
Discuss customer relationship management and strategies for building lasting customer relationships
Analyze the major challenges facing marketers heading into the new “connected” millennium
Principles of Marketing: 6th Canadian Edition