2. Marketing: Managing Profitable Customer Relationships 1

3. 1-2 ROAD MAP: Previewing the Concepts Define marketing and outline the steps in the marketing process. Define marketing and outline the steps in the marketing process. Explain the importance of understanding customers and the marketplace, and identify the five core marketplace concepts. Explain the importance of understanding customers and the marketplace, and identify the five core marketplace concepts. Identify the key elements of a customer-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Identify the key elements of a customer-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Discuss customer relationship management and strategies for building lasting customer relationships. Discuss customer relationship management and strategies for building lasting customer relationships. Describe the major trends and forces that are changing the marketing landscape in this new age of relationships. Describe the major trends and forces that are changing the marketing landscape in this new age of relationships.

4. 1-3 What Is Marketing? Simple Definition: Marketing is managing profitable customer relationships. Simple Definition: Marketing is managing profitable customer relationships.Goals: 1. Attract new customers by promising superior value. 2. Keep and grow current customers by delivering satisfaction.

5. 1-4 Marketing Old vs. New Old view of marketing: Making a sale -- “Telling and Selling” New view of marketing: Satisfying customer needs

6. 1-5 Marketing Defined 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.

7. 1-6 A Simple Model of the Marketing Process Understand the marketplace and customer needs and wants Capture value from customers to create profits and customer equity (value) Create value for customers and build customer relationships Capture value from customers in return Design a customer- driven marketing strategy Design a customer- driven marketing strategy Build profitable relationships and create customer delight (pleasure) Build profitable relationships and create customer delight (pleasure) Construct a marketing program that delivers superior value Construct a marketing program that delivers superior value

8. What are Consumers’ Needs, Wants, and Demands?

9. 1-8 This Is a Need Needs - state of felt deprivation (deficiency) including physical, social, and individual needs.

10. 1-9 Types of Needs Physical: Physical: –Food, clothing, shelter, safety Social: Social: –Belonging, affection Individual: Individual: –Learning, knowledge, self-expression

11. 1-10 This Is a Want Wants - form that a human need takes, as shaped by culture and individual personality.

12. 1-11 This Is Demand “Demand” Wants Buying Power

13. 1-12 Need / Want Fulfillment Needs and Wants Fulfilled through a Marketing Offer : Needs and Wants Fulfilled through a Marketing Offer : –Some combination of products, services, information, or experiences offered to a market to satisfy a need or want.

14. 1-13 Products Anything that can be Offered to a Market to Satisfy a Need or Want Products Anything that can be Offered to a Market to Satisfy a Need or Want Persons Places Organizations Ideas Information What Satisfies Consumers’ Needs and Wants? Services Activity or Benefit Offered for Sale That is Essentially Intangible and Does Not Result in the Ownership of Anything Services Activity or Benefit Offered for Sale That is Essentially Intangible and Does Not Result in the Ownership of Anything

15. 1-14 Product as an Idea Products do not have to be physical objects. Here the “product” is an idea—protecting animals.

16. 1-15 Value and Satisfaction Expectation Performance 810 If performance is lower than expectations, satisfaction is low. If performance is higher than expectations, satisfaction is high. ExpectationPerformance 108

17. 1-16 Exchange vs. Transaction Exchange: Exchange: –Act of obtaining a desired object from someone by offering something in return. Transaction: Transaction: –A trade of values between two parties. –One party gives X to another party and gets Y in return. Can include cash, credit, check, or barter.

18. 1-17 What is a Market? The set of actual and potential buyers of a product. The set of actual and potential buyers of a product. These people share a need or want that can be satisfied through exchange relationships. These people share a need or want that can be satisfied through exchange relationships.

19. 1-18 Elements of a Modern Marketing System

20. 1-19 Marketing Management The art and science of choosing target markets and building profitable relationships with them. The art and science of choosing target markets and building profitable relationships with them.

21. 1-20 Segmentation and Target Marketing Market Segmentation: Divide the market into segments of customers Target Marketing: Select the segment to cultivate (promote) #1#2

22. 1-21 Marketing Management Finding and increasing demand, also changing or reducing demand, such as in demarketing. DemandManagement Temporarily or permanently reducing the number of customers or shifting their demand. Demarketing

23. 1-22 Marketing and Sales Concepts Contrasted

24. 1-23 The Marketing MixCustomerNeeds Product Price Promotion Distribution

25. 1-24 Customer Relationship Management The process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. The process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.

26. 1-25 Customer Perceived Value (comparing the marketing offer with competition) Customer’s evaluation of the difference between all the benefits and all the costs of a marketing offer relative to those of competing offers. Customer’s evaluation of the difference between all the benefits and all the costs of a marketing offer relative to those of competing offers.

27. 1-26 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.”

28. 1-27 Customer Satisfaction Dependent on the product’s perceived performance relative to a buyer’s expectations. Dependent on the product’s perceived performance relative to a buyer’s expectations.

29. 1-28 Customer Relationship Levels Basic Relationship Full Partnership Continuum (range)

30. 1-29 Partner Relationship Marketing Partners Inside the Firm 1.All employees customer focused 2.Teams coordinate efforts toward customers Partners Outside the Firm 1.Supply chain management 2.Strategic alliances

31. 1-30 Customer Lifetime Value Customer Lifetime Value –The entire stream of purchases that the customer would make over a lifetime of patronage (investment) Share of Customer Share of Customer –The share a company gets of the customers purchasing in their product categories. Customer Loyalty & Retention (preservation)

32. 1-31 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.

33. 1-32 Customer Equity Customer equity: is the total combined customer lifetime values of all the company’s customers. Customer equity: is the total combined customer lifetime values of all the company’s customers.

34. 1-33 Customer Relationship Groups Projected loyalty High Profitability 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 ButterfliesTrue Friends Barnacles