2. Marketing: Managing Profitable Customer Relationships 1

3. 1-1 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.

4. 1-2 Marketing Old vs. New Old view of marketing: Making a sale ̶ “Telling and Selling” New view of marketing: Satisfying customer needs

5. 1-3 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.

6. 1-4 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 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 Build profitable relationships and create customer delight Construct a marketing program that delivers superior value Construct a marketing program that delivers superior value

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

8. 1-6 This Is a Need Needs - state of felt deprivation including physical, social, and individual needs.

9. 1-7 Types of Needs Physical: Physical: –Food, clothing, shelter, safety Social: Social: –Belonging, affection Individual: Individual: –Learning, knowledge, self-expression

10. 1-8 This Is a Want Wants - form that a human need takes, as shaped by culture and individual personality.

11. 1-9 This Is Demand “Demand” Wants Buying Power

12. 1-10 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.

13. 1-11 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

14. 1-12 Marketing Myopia Sellers pay more attention to the specific products they offer than to the benefits and experiences produced by the products. 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.” They focus on the “wants” and lose sight of the “needs.”

15. 1-13 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

16. 1-14 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.

17. 1-15 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.

18. 1-16 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. Questions to ask: 1. What customers will we serve? What is our target market? 2. How can we best serve these customers? What is our value proposition?

19. 1-17 Segmentation and Target Marketing Market Segmentation: Divide the market into segments of customers Target Marketing: Select the segment to cultivate #1#2

20. 1-18 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

21. 1-19 Value Proposition The set of benefits or values a company promises to deliver to consumers to satisfy their needs. The set of benefits or values a company promises to deliver to consumers to satisfy their needs. It cleans and freshens like sunshine! http://www.gainlaundry.com

22. 1-20 Marketing Management Philosophies Production Concept Product Concept Selling Concept Marketing Concept Societal Marketing Concept

23. 1-21 Marketing and Sales Concepts Contrasted

24. 1-22 Societal Marketing Concept

25. 1-23 The Marketing MixCustomerNeeds Product Price Promotion Distribution CustomerNeeds Product Price Promotion Distribution

26. 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.

27. 1-25 Customer Perceived Value 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.

28. 1-26 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. 1-27 Customer Relationship Levels Basic Relationship Full Partnership Continuum

30. 1-28 Loyalty and Retention Financial Benefits Social Benefits Structural Ties

31. 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

32. 1-30 Customer Lifetime Value Customer Lifetime Value –The entire stream of purchases that the customer would make over a lifetime of patronage. Share of Customer Share of Customer –The share a company gets of the customers purchasing in their product categories. Customer Loyalty & Retention

33. 1-31 Customer Equity Customer equity is the total combined customer lifetime values of all of the company’s customers. Customer equity is the total combined customer lifetime values of all of the company’s customers.

34. 1-32 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

35. 1-33 The Internet The Internet has been hailed as the technology behind a New Economy. The Internet has been hailed as the technology behind a New Economy. Marketing applications include: Marketing applications include: –“click-and-mortar” companies –“click-only” companies –Business-to-business e-commerce Business-to-business transactions online are expected to reach $4.3 trillion in 2005. Business-to-business transactions online are expected to reach $4.3 trillion in 2005. By 2005, 500,000 companies will use the Internet to do business. By 2005, 500,000 companies will use the Internet to do business.

36. 1-34 New Marketing Landscape Rapid Globalization Ethics & Social Responsibility New World of Marketing Relationships Not-for-Profit Marketing