0. Marketing: Managing Profitable Customer Relationships
Chapter 1

1. Objectives Be able to define marketing and discuss its core concepts.
Be able to define marketing management and compare the five marketing management orientations.

2. Objectives Understand customer relationship management and strategies.
Realize the major challenges facing marketers in the new “connected” millennium.

3. 1. Introduction
a. Today’s successful companies at all levels have one thing in common.
1). All successful companies are:
a). Strongly customer focused.
b). Heavily committed to marketing.

4. b- To be successful an organization motivates everyone in the organization to produce superior value for their customers, leading to high levels of customer satisfaction.

5. What is Marketing?
Marketing is managing profitable customer relationships
Attracting new customers
Retaining and growing current customers
“Marketing” is NOT synonymous with “sales” or “advertising”

6. 2. What is Marketing?
a. Creating customer value and satisfaction are at the very heart of modern marketing thinking and practice

7. 2. What is Marketing?
b. A very simple definition of marketing is managing profitable customer relationships.

8. 2. What is Marketing?
1). The twofold goal of marketing is to attract new customers by promising superior value and to keep and grow current customers by delivering
satisfaction.

9. 2). Sound marketing is critical to the success of every organization.

10. c. You already know a lot about marketing—it’s all around you.

11. Marketing Defined
d. Many people think of marketing only as selling and advertising.
1). Marketing is no longer “telling and selling.”
2). Today, marketing’s new sense is concerned with satisfying customer needs.

12. What is Marketing? Kotler’s social definition:
“Marketing is 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.”

13. Needs, Wants, and Demands
f. Human needs are the most basic concept underlying marketing.
-a human need is a state of felt deprivation

14. 1). Humans have many complex needs.
a). Basic, physical needs for food, clothing, warmth, and safety.
b). Social needs for belonging and affection.
c). Individual needs for knowledge and self-expression.

15. 2). These needs are part of the basic human makeup.

16. g. Another concept in marketing is human wants
g. Another concept in marketing is human wants. A human want is the form that a human need takes as shaped by culture and individual personality.
h. Demands are human wants that are backed by buying power.

17. 1). Consumers view products as bundles of benefits and choose products that give them the best bundle for their money

18. i. Outstanding marketing companies go to great lengths to learn about and understand their customer’s needs, wants, and demands.

19. Many Things Can Be Marketed!
What is Marketing?
Many Things Can Be Marketed!
Goods
Services
Experiences
Events
Persons
Places
Properties
Organizations
Information
Ideas

20. Marketing Offers—Products, Services, and Experiences
j. Companies address needs by putting forth a value proposition, a set of benefits that they promise to consumers to satisfy their needs.

21. 1). The value proposition is fulfilled through a marketing offer—some combination of products, services, information, or experiences offered to a
market to satisfy a need or want.

22. 2). The concept of product is not limited to physical objects and can include experiences, persons, places, organizations, information, and ideas.

23. 3). Be careful of paying attention to the product and not the benefit being satisfied.
4). “Marketing myopia” is caused by shortsightedness or losing sight of underlying customer needs by only focusing on existing wants

24. 5). Smart marketers create brand meaning and brand experiences for consumers.

25. Core Marketing Concepts
What is Marketing?
Core Marketing Concepts
Needs, wants, and demands
Marketing offers: including products, services and experiences
Value and satisfaction
Exchange, transactions and relationships
Markets

26. Value and Satisfaction
k. Customer value is the difference between the values that the customer gains from owning and using a product and the costs of obtaining the product. Customers
form expectations about the value of various marketing offers and buy accordingly.

27. l. Customer satisfaction depends on a product’s perceived performance in delivering value relative to a buyer’s expectations. Customer satisfaction is a key influence
on future buying behavior

28. 1). Marketers must be careful to set the right level of expectations.
2). Customer value and customer satisfaction are key building blocks for
developing and managing customer relationships.

29. Exchanges, Transactions, and Relationships
m. Marketing occurs when people decide to satisfy needs and wants through exchange. Exchange is the act of obtaining a desired object from someone by offering something in return.

30. n. Whereas exchange is a core concept of marketing, a transaction (a trade of values between two parties) is marketing’s unit of measurement. Most involve money, a response, and action.

31. o. Marketing consists of actions taken to build and maintain desirable exchange relationships with target audiences involving a product, service, idea, or other
object.

32. Markets
p. The concepts of exchange and relationships lead to the concept of a market market is the set of actual and potential buyers of a product.

33. 1). Originally a “market” was a place where buyers and sellers gathered to exchange goods (such as a village square).
2). Economists use the term to designate a collection of buyers and sellers who transact in a particular product class (as in the grain or housing market).

34. 3). Marketers see buyers as constituting a market and sellers constituting an industry.
4). Marketers are keenly interested in markets

35. Marketing
q. The concept of markets brings one full circle to the concept of marketing.

36. 1). Sellers must search for buyers, identify their needs, design good products and services, set prices for them, promote them, and store and deliver them.
2). A modern marketing system includes all of the elements necessary to bring buyers and sellers together. This might include such activities as product development, research, communication, distribution, pricing, and service.

37. 3). Each of the major actors in a marketing system adds value for the next level of the system. There is often critical interdependency among network members.

38. Marketing Management
Marketing management is “the art and science of choosing target markets and building profitable relationships with them.”
Creating, delivering and communicating superior customer value is key.

39. 1). Marketing management involves managing demand, which in turn involves managing customer relationships

40. Marketing Management Customer Management: Demand Management:
Marketers select customers that can be served well and profitably.
Demand Management:
Marketers must deal with different demand states ranging from no demand to too much demand.

41. Customer and Demand Management
b. Marketing management is concerned not only with finding and increasing demand, but also with changing or even reducing it.

42. 1). Demarketing’s aim is to reduce demand temporarily or permanently (move traffic away from a popular tourist attraction during peak demand times).
2). In reality, marketing anagement is customer management and demand
management

43. Management Orientations
Marketing Management
Marketing Management
Management Orientations
Selling concept
Marketing concept
Production concept
Product concept
Societal marketing concept

44. 4. Marketing Management Orientations
a. There are five alternative concepts under which organizations conduct their marketing activities: the production, product, selling, marketing, and societal marketing concepts.

45. The Production Concept
b. The production concept holds that consumers will favor products that are available and highly affordable and that management should, therefore, focus on improving production and distribution efficiency. This is one of the oldest philosophies that guides sellers

46. c. The production concept is useful when:
1). Demand for a product exceeds the supply.
2). The product’s cost is too high and improved productivity is needed to bring it down.

47. d. The risk with this concept is in focusing too narrowly on company operations. Do not ignore the desires of the market. This concept can lead to “marketing myopia.”

48. The Product Concept
e. The product concept states that consumers will favor products that offer the most quality, performance, and features, and that the organization should, therefore devote its energy to making continuous product improvements.

49. 1). Some manufacturers mistakenly believe that if they “build a better mousetrap,”consumers will beat a path to their door just for their product.
2). The product concept can also lead to “marketing myopia,” the failure to see the challenges being presented by other products.

50. The Selling Concept
f. Many organizations follow the selling concept. The selling concept is the idea that consumers will not buy enough of the organization’s products unless the organization undertakes a large-scale selling and promotion effort.

51. 1). This concept is typically practiced with unsought goods (those that buyers do not normally think of buying).
2). To be successful with this concept, the organization must be good at tracking down the interested buyer and selling them on the product benefits.

52. 3). Industries that use this concept usually have overcapacity
3). Industries that use this concept usually have overcapacity. Their aim is to sell what they make rather than make what will sell in the market
4). There are not only high risks with this approach but low satisfaction by customers.

53. The Marketing Concept
g. The marketing concept holds that achieving organizational goals depends on determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors do.

54. 1). Under the marketing concept, customer focus and value are paths to sales and profits

55. h. The marketing and selling concepts are often confused
h. The marketing and selling concepts are often confused. The primary differences are:
1). The selling concept takes an “inside-out” perspective (focuses on existing
products and uses heavy promotion and selling efforts).
2). The marketing concept takes an “outside-in” perspective (focuses on customer needs, values, and satisfactions).

56. i. Many companies claim to adopt the marketing concept but really do not unless
they commit to market-focused and customer-driven philosophies.
1). Customer-driven companies research current customers to learn about their desires, gather new product and service ideas, and test proposed product improvements

57. 2). Such customer-driven marketing usually works well when there exists a clear need and when customers know what they want.
3). When customers do not know what they want, marketers can try customer- driving marketing—understanding customer needs even better than customers themselves do, and creating products and services that will meet existing and latent needs now and in the future.

58. The Societal Marketing Concept
j. The societal marketing concept holds that the organization should determine the needs, wants, and interests of target markets. It should then deliver the desired satisfactions more effectively and efficiently than competitors in a way that maintains or improves the consumer’s and the society’s well-being.

59. 1). The societal marketing concept is the newest of the marketing philosophies.
2). It questions whether the pure marketing concept is adequate given the wide variety of societal problems and ills.
3). According to the societal marketing concept, the pure marketing concept overlooks possible conflicts between short-run consumer wants and long- run consumer welfare.

60. 4). The societal concept calls upon marketers to balance three considerations in setting their marketing policies:
a). Company profits.
b). Customer wants.
c). Society’s interests.

61. 5). It has become good business to consider and think of society’s interests when the organization makes marketing decisions.

63. CRM
CRM – Customer relationship management “is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.”

64. CRM
It costs 5 to 10 times MORE to attract a new customer than it does to keep a current customer satisfied.
Marketers must be concerned with the lifetime value of the customer.

65. CRM Key Concepts Attracting, retaining and growing customers
Customer value/satisfaction
Perceptions are key
Meeting/exceeding expectations creates satisfaction
Loyalty and retention
Benefits of loyalty
Loyalty increases as satisfaction levels increase
Delighting consumers should be the goal
Growing share of customer
Cross-selling
Key Concepts
Attracting, retaining and growing customers
Building customer relationships and customer equity

66. CRM Key Concepts Attracting, retaining and growing customers
Customer equity
The total combined customer lifetime values of all customers.
Measures a firm’s performance, but in a manner that looks to the future.
Key Concepts
Attracting, retaining and growing customers
Building customer relationships and customer equity

67. CRM Key Concepts Attracting, retaining and growing customers
Customer relationship levels and tools
Target market typically dictates type of relationship
Basic relationships
Full relationships
Customer loyalty and retention programs
Adding financial benefits
Adding social benefits
Adding structural ties
Key Concepts
Attracting, retaining and growing customers
Building customer relationships and customer equity

68. Marketing Challenges
Technological advances, rapid globalization, and continuing social and economic shifts are causing marketplace changes.
Major marketing developments can be grouped under the theme of Connecting.

69. Marketing Challenges Connecting Via technology With customers
Advances in computers, telecommunications, video-conferencing, etc. are major forces.
Databases allow for customization of products, messages and analysis of needs.
The Internet
Facilitates anytime, anywhere connections
Facilitates CRM
Creates marketspaces
Via technology
With customers
With marketing partners
With the world

70. Marketing Challenges Connecting Via technology With customers
Selective relationship management is key.
Customer profitability analysis separates winners from losers.
Growing “share of customer”
Cross-selling and up-selling are helpful.
Direct sales to buyers are growing.
Via technology
With customers
With marketing partners
With the world

71. Marketing Challenges Connecting Via technology With customers
Partner relationship management involves:
Connecting inside the company
Connecting with outside partners
Supply chain management
Strategic alliances
Via technology
With customers
With marketing partners
With the world

72. Marketing Challenges Connecting Via technology With customers
Globalization
Competition
New opportunities
Greater concern for environmental and social responsibility
Increased marketing by nonprofit and public-sector entities
Social marketing campaigns
Connecting
Via technology
With customers
With marketing partners
With the world