Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition Chapter1 Marketing: Managing Profitable Customer Relationships

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 1-2 Learning Goals 1.Define marketing and outline the marketing process. 2.Explain the importance of understanding customers and the marketplace, and identify the five core marketplace concepts 3.Identify the key elements of a customer-driven marketing strategy and discuss the marketing management orientations. 4.Discuss customer relationship management and identify strategies for creating and capturing value from customers. 5.Describe the major trends and forces changing the marketing landscape.

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 1-3 NASCAR is the #1 televised motorsport in Canada Compelling blend of live racing events, media coverage and Web sites Show the customer a good time To develop customer relationship NASCAR creates a wholesome family-oriented environment. Fans are passionate about NASCAR Fans spend nearly $700 a year on NASCAR merchandise Second highest regular season sport on TV NASCAR attracts over 250 big-name sponsors Big part of the NASCA experience is the feeling of accessibility NASCAR –What is their secret?

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 1-4 Learning Goals 1.Define marketing and outline the marketing process. 2.Explain the importance of understanding customers and the marketplace, and identify the five core marketplace concepts 3.Identify the key elements of a customer-driven marketing strategy and discuss the marketing management orientations. 4.Discuss customer relationship management and identify strategies for creating and capturing value from customers. 5.Describe the major trends and forces changing the marketing landscape.

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 1-5 What is Marketing? Marketing is about managing profitable customer relationships –Attracting new customers –Retaining and growing current customers Marketing Defined: – “Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging value with others”

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 1-6 Learning Goals 1.Define marketing and outline the marketing process. 2.Explain the importance of understanding customers and the marketplace, and identify the five core marketplace concepts 3.Identify the key elements of a customer-driven marketing strategy and discuss the marketing management orientations. 4.Discuss customer relationship management and identify strategies for creating and capturing value from customers. 5.Describe the major trends and forces changing the marketing landscape.

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 1-7 Core Concepts –Understand the marketplace and customer wants and needs –Design a customer-driven marketing strategy –Construct a marketing program that delivers superior value –Build profitable relationships and create customer delight –Capture value from customers to create profits and customer quality Understanding the Marketplace Need –State of felt deprivation Wants –The form of needs as shaped by culture and the individual Demands –Wants which are backed by buying power

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 1-8 Understanding the Marketplace Marketing offer –Combination of products, services, information or experiences that satisfy a need or want –Offer may include services, activities, people, places, information or ideas Core Concepts –Understand the marketplace and customer wants and needs (cont.) –Design a customer-driven marketing strategy –Construct a marketing program that delivers superior value –Build profitable relationships and create customer delight –Capture value from customers to create profits and customer quality

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 1-9 Understanding the Marketplace Value –Customers form expectations regarding value –Marketers must deliver value to consumers Satisfaction –A satisfied customer will buy again and tell others about their good experience Core Concepts –Understand the marketplace and customer wants and needs (cont.) –Design a customer-driven marketing strategy –Construct a marketing program that delivers superior value –Build profitable relationships and create customer delight –Capture value from customers to create profits and customer quality

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 1-10 Discussion Questions Customer Satisfaction When have you, personally, been extremely satisfied or dissatisfied with a product? Why? Why is it so difficult for companies to deliver value to consumers???

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 1-11 Understanding the Marketplace Core Concepts –Understand the marketplace and customer wants and needs (cont.) –Design a customer-driven marketing strategy –Construct a marketing program that delivers superior value –Build profitable relationships and create customer delight –Capture value from customers to create profits and customer quality Exchange –The act of obtaining a desired object from someone by offering something in return –One exchange is not the goal, relationships with several exchanges are the goal –Relationships are built through delivering value and satisfaction

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 1-12 Understanding the Marketplace Market –Set of actual and potential buyers of a product –Marketers seek buyers that are profitable Core Concepts –Understand the marketplace and customer wants and needs (cont.) –Design a customer-driven marketing strategy –Construct a marketing program that delivers superior value –Build profitable relationships and create customer delight –Capture value from customers to create profits and customer quality

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 1-13 Learning Goals 1.Define marketing and outline the marketing process. 2.Explain the importance of understanding customers and the marketplace, and identify the five core marketplace concepts 3.Identify the key elements of a customer-driven marketing strategy and discuss the marketing management orientations. 4.Discuss customer relationship management and identify strategies for creating and capturing value from customers. 5.Describe the major trends and forces changing the marketing landscape.

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 1-14 Designing a Customer-Driven Marketing Strategy Marketing management is “the art and science of choosing target markets and building profitable relationships with them.” A winning marketing strategy –What customers will we serve? –How can we serve these customers best?

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 1-15 Designing a Customer-Driven Marketing Strategy What customers will we serve? –Market segmentation and target marketing –Marketers select customers that can be served profitably –Known as customer management and demand management How can we serve these customers best? –By defining a value proposition that will differentiate and position the brand in the marketplace –Is set of benefits or values a company promises to deliver to consumers in order to satisfy their needs

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 1-16 Netflix – DVDs by mail Netflix began in early 2000 DVDs are delivered to your home with return mail envelope Monthly charge with unlimited rentals – limited amount out at one time

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 1-17 Discussion Questions Netflix 1.How might Netflix define its target market? 2.What need or want does it fulfill? 3.What is its marketing offer? 4.What is its value proposition? Is it a strong value proposition for its target market???

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 1-18 Marketing Management Orientations The Production Concept –Consumers will favour products that are available and highly affordable The Product Concept –Consumers will favour products that offer the most in quality, performance, and innovative features

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 1-19 Marketing Management Orientations The Selling Concept –Consumers will not buy enough of the firm’s products unless it undertakes a large-scale selling effort. The Marketing Concept –Achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do.

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 1-20 Marketing Management Orientations The Societal Marketing Concept –The marketing strategy should deliver value to customers and other stakeholders affected by marketing decisions in a way that maintains or improves the consumer’s and the society’s well-being.

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 1-21 Preparing a Marketing Plan and Program Build customer relationships by transforming the marketing strategy into action Includes the marketing mix and the 4P’s of marketing –Product –Price –Place –Promotion

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 1-22 Learning Goals 1.Define marketing and outline the marketing process. 2.Explain the importance of understanding customers and the marketplace, and identify the five core marketplace concepts 3.Identify the key elements of a customer-driven marketing strategy and discuss the marketing management orientations. 4.Discuss customer relationship management and identify strategies for creating and capturing value from customers. 5.Describe the major trends and forces changing the marketing landscape.

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 1-23 Building Customer Relationships CRM – Customer relationship management... “is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. It deals with all aspects of acquiring, keeping and growing customers.”

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 1-24 Relationship Building Blocks: Value and Satisfaction Customer Perceived Value –The customers’ evaluation of the difference between benefits and costs. –Customers often do not judge values and costs accurately or objectively. Customer Satisfaction –Product’s perceived performance relative to customers’ expectations.

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 1-25 Customer Relationship Levels and Tools Basic relationships –low margin customers Full partnerships –key customers Frequency marketing programs –Reward customers who buy frequently or in large amounts Club marketing programs –Offer members special discounts and create member communities

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 1-26 The Changing Nature of Customer Relationships Relating with more Carefully Selected Customers Relating for the Long-Term Relating Directly

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 1-27 Partnership Relationship Management Working closely with partners in other company departments and outside the company to jointly bring greater value to customers Partners Inside the Company Partners Outside the Firm –Strategic partners –Supply chain management

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 1-28 Capturing Value from Customers Creating Customer Loyalty and Retention –Customer delight leads to emotional relationships and loyalty –Customer lifetime value shows true worth of a customer Growing Share of Customer –Share of customer’s purchase in a product category –Achieved through offering greater variety, cross-sell and up-sell strategies

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 1-29 Capturing Value from Customers Building Customer Equity –The combined customer lifetime values of all current and potential customers –Measures a firm’s performance, but in a manner that looks to the future –Choosing the “best” customers is key

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 1-30 Capturing Value from Customers The company can classify customers according to their potential profitability and manage its relationships accordingly.

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 1-31 Learning Goals 1.Define marketing and outline the marketing process. 2.Explain the importance of understanding customers and the marketplace, and identify the five core marketplace concepts 3.Identify the key elements of a customer-driven marketing strategy and discuss the marketing management orientations. 4.Discuss customer relationship management and identify strategies for creating and capturing value from customers. 5.Describe the major trends and forces changing the marketing landscape.

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 1-32 The New Marketing Landscape Advances in computers, telecommunications information, transportation –Customer research and tracking –Product development –Distribution –New advertising tools –24/7 marketing through the Internet Challenges –The Digital Age –Rapid Globalization –Ethics and Social responsibility –Not-for-profit Marketing

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 1-33 The New Marketing Landscape Geographical and cultural distances have shrunk –Greater market coverage –More options for purchasing and manufacturing –Increased competition from foreign competitors Challenges –The Digital Age –Rapid Globalization –Ethics and Social responsibility –Not-for-profit Marketing

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 1-34 The New Marketing Landscape Marketers need to take great responsibility for the impact of their actions –Caring capitalism is a way to differentiate your company Challenges –The Digital Age –Rapid Globalization –Ethics and Social responsibility –Not-for-profit Marketing

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 1-35 The New Marketing Landscape Many non-profit organizations are realizing the importance of strategic marketing –Performing arts –Government agencies –Colleges –Hospitals –Churches Challenges –The Digital Age –Rapid Globalization –Ethics and Social responsibility –Not-for-profit Marketing

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 1-36 What is Marketing? The process of building profitable customer relationships by creating value for customers and capturing value in return

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition 1-37 Learning Goals 1.Define marketing and outline the marketing process. 2.Explain the importance of understanding customers and the marketplace, and identify the five core marketplace concepts 3.Identify the key elements of a customer-driven marketing strategy and discuss the marketing management orientations. 4.Discuss customer relationship management and identify strategies for creating and capturing value from customers. 5.Describe the major trends and forces changing the marketing landscape.