Marketing: Managing Profitable Customer Relationships Chapter 1 Powerpoint slides Extendit! version Instructor name Course name School name Date Principles of Marketing: 6th Canadian Edition

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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