Marketing Management 14 February 2011

Course Outcomes and Outline Outcomes Firm grasp of Principals of Marketing Construction and Implementation of a basic Marketing Strategy Course Outline Module Guide Prescribed Textbook – Kotler and Armstrong 13 th Edition Recommended readings - Alternative textbooks Ad hoc articles and writings

Creating and Capturing Customer Value Theme/Chapter seeks to answer and gather understanding of: What is MARKETING? What is the aim of MARKETING? Steps of a MARKETING Process Key elements of customer-driven MARKETING strategy Customer Relationship Management (CRM) and strategies for creating value

What is Marketing? Marketing is not sales and advertising! Official Definition: The process of managing profitable customer relationships Secondary Definition: Applying micro economics to solicit a profitable return Goal: To attract new customers and to grow existing customer relationships Value and Satisfaction are at the heart of Marketing We’re no longer telling and selling, but seeking to satisfy a customer’s needs and wants Sales and Advertising are components of a far greater Marketing Mix

The Marketing Process 1.Understand your segment (market) and your customer’s needs and wants 2.Design a customer-centric marketing strategy 3.Create an integrated marketing program which will deliver value 4.Initiate and build profitable relationships and delight your customers 5.Deliver superior value to customers and derive profits and return business

Marketing Process

Understanding Marketplace Concepts We need to understand consumers and the marketplace in which we want to operate Customer Needs, Wants and Demands Market Offerings: Products, Services, and Experiences Customer Value and Satisfaction Exchanges and Relationships Markets

Customer-driven Marketing Strategy It’s only once you understand consumers and your marketplace that you can design a marketing strategy. A marketing strategy aims to answer questions related to our target market and our value proposition Marketing Management: The art and science of choosing target markets and building profitable relationships with them

A Customer-Driven Marketing Strategy Select Customers to serve – segmentation, target marketing and perhaps demarketing Choosing a Value Proposition – USP Marketing Management – driving philosophy to guide your strategies and tactics Production Product Selling and Sales Marketing Societal

Marketing Management Orientations Production Concept: available and affordable – production and operations based Product Concept: quality, performance and innovation – continuous improvements Selling Concept: sales and promotions – in your face and aggressive selling

Marketing Management Orientations Cont. Marketing Concept: understanding target market’s needs and wants and satisfying this better – sense the market and respond to it (customer driven) Societal Marketing Concept: trying to satisfy everyone – consumers, the company and society (wants, profits and wellbeing)

Integrated Marketing Plan Marketing Strategy – target customers and how value is created for the customers Marketing Program – transforming the marketing strategy into action and building relationships The Marketing Mix – the marketing tools utilised to implement the strategy The Marketing Tools – the 4 Ps

Marketing Plan

Marketing 4 Ps Product – wants/needs satisfying offering Place – where will the consumers get it Price – what will we charge for the offering Promotion – persuade consumers of the offering to attract them The above have to appropriately mixed and managed by the right people and should follow a tested process

Marketing 4 Ps

Building Customer Relationships Strong profitable customer relationships can never be achieved without the above fore mentioned steps: Understanding the Marketplace and needs of customers (Exploring Value) Designing a customer-driven marketing strategy (Creating Value) Constructing Marketing Programs (Presenting Value)

Customer Relationship Management (CRM) Official Def: The process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction Secondary Def: Customer data management activity to maximise customer loyalty The creation and delivering of superior customer value leads to satisfaction which in tern develops customer loyalty (Delivering Value)

Customer Relationship Management (CRM) In a world of many different products and services a customer selects based on perceived value Customer-perceived value: the customer’s evaluation of the difference between benefits and costs compared to other offers. Values and costs aren’t always judges accurately and objectively – their perceived Customer Satisfaction: the product’s perceived performance versus the customer’s expectations If performance is - customer dissatisfaction If performance is - customer is satisfied If performance is - customer is highly satisfied or delighted

Customer Relationship Management (CRM) Delighted customers become repeat customers and evangelists who spread the word about good experiences Great companies have exceptional value and service satisfaction as an attitude Customer satisfaction can be increased with lower prices – less profitability Marketers need a good balance: more customer value and satisfaction at a profitable price

CRM Strategies The aim is to build the right relationships with the right customer Mass marketing to all customers is so yesterday Today it’s selective relationship management – targeting fewer and more profitable customers – weed out losing customers Relating and interacting with chosen customers in deeper, more meaningful ways – two way interactive relationships Consumer generated marketing is a huge and growing phenomena, whether invited or not – videos (Youtube), Facebook, Blogs, websites etc

Value from Customers Customer Equity: Total combined customer lifetime values of all customers of a company Customer Lifetime Value: The value of holistic purchases that a customer makes over a lifetime of consistent patronage Share of Customer: The portion of a customer’s purchasing power that a company receives in its product category All customers and potential customers should be seen and viewed as assets that need maximisation and consistent management. Not all customers are good investments and can be unprofitable. Companies must classify customers according to potential profitability and projected loyalty. Different CRM strategies must then be applied to the various groups

Theme Summary Marketing has to ensure that it: Explores Value Creates Value Presents Value Delivers Value Marketers need to build relationships with internal departments and external partners to deliver greater value to customers – partner relationship management

See you next time. Cheers Guys!