1. 1 BUS 243 Introduction to Marketing & Distribution Professor Marshall Queens College

2. 2 What is Marketing? 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.

3. 3 What is Marketing?

4. 4 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.

5. 5 Marketing has Changed Marketing used to be thought of as telling & selling Today marketing is more about satisfying customer needs through the creation and management of profitable relationships.

6. 6 Amazon.com Good example of a company which sees the importance of managing customer relationships. Tracks your purchases. Simplifies the act of making a purchase. Notifies you of similar books or related items through use of ‘collaborative filtering’ technology to examine past purchasing experiences and fit you to profiles of similar customers.

7. 7 Careers in Marketing SalesAdvertising Brand Management Public Relations Logistics (distribution) Marketing Research See Appendix 4 for more information.

8. 8 5-Step Marketing Process Understand Marketplace & Customer needs/wants Design Customer- Driven Marketing Strategy Construct Marketing Program Build Profitable Relationships Capture value from Customers & Generate Profits

9. 9 Step 1: Understand the Marketplace Marketers must understand customer needs and wants. Needs Physical: Food, clothing, shelter, safety Social: Belonging, affection Individual: Learning, knowledge, self-expression Wants Form that a human need takes, as shaped by culture and individual personality. Wants + Buying Power = Demand

10. 10 People demand products with benefits that add up to the most value and satisfaction (provide the greatest utility). These needs and wants are fulfilled through a Marketing Offer – a combination of products, services, information, and/or experiences.

11. 11 Marketing Myopia When sellers pay more attention to the specific product they are selling and lose sight of benefits produced by the products. They focus on the ‘wants’ and lose sight of the ‘needs’. These sellers will have trouble if a new product comes along that can serve the customers needs better. Example: a consumer of a ½ inch drill bit really needs a ½ inch hole.

12. 12 Exchange: the act of obtaining a desired object by offering something in return. Transaction: trade of values between two parties (unit of measurement).

13. 13 What is a Market? The set of actual and potential buyers of a product. These people share a need or want that can be satisfied through exchange relationships.

14. 14 Step 2: Design a Customer-Driven Marketing Strategy Once they understand their customers, marketing managers can design a customer-driven strategy. Marketing Management is the art and science of choosing target markets and building profitable relationships with them.

15. 15 Marketing Managers’ Questions What customers will we serve (what is our target market)? How can we serve these customers best (what is our value proposition)? Marketing Managers cannot serve all customers in every way, this may result in not serving any customers well. Instead, the company wants to select only those customers that it can serve well and profitably. Example: Porsche verses Family Dollar

16. 16 Segmentation & Target Marketing Market Segmentation –Divide the market into segments of customers Target Marketing –Select the target to cultivate

17. 17 Value Proposition The set of benefits or values a company promises to deliver to satisfy consumers’ needs. This differentiates one brand from another.

18. 18 Targeting Examples

19. 19 Targeting Examples

20. 20 Targeting Examples

21. 21 Demarketing Temporarily or permanently reducing the number of customers or shifting their demand. Example: highway department encouraging mass transit or carpooling to prevent congestion.

22. 22 Step 3: Step 3: Construct a Marketing Program In this step, the marketing strategy is transformed into action.

23. 23 The Marketing Mix The set of marketing tools the firm uses to implement its marketing strategy. The major tools are classified as the 4 P’s: ProductPrice Distribution (Place) Promotion

24. 24 Step 4: Step 4: Build Profitable Relationships Customer relationship management: the overall process of building and maintaining profitable customer relationships by delivering superior value and satisfaction. (all aspects of acquiring, keeping and growing customers) Customer perceived value: a customer’s evaluation of the difference between all benefits and all costs of a marketing offer compared to competing offers. (customers act on perceived value)

25. 25 Customer Satisfaction Product’s perceived performance relative to a buyer’s expectations. Outstanding marketing companies go out of their way to keep important customers satisfied. Smart companies try to go above and beyond the customers’ expectations by delivering more than they promise. Highly satisfied customers make repeat purchases and tell others about their good experiences with the product. Customer-centered firms only attempt to maximize customer satisfaction subject to a certain profit level. (simply maximizing customer satisfaction would result in lower profits). Have you had experiences with customer satisfaction that stand out in your mind? Have these experiences been positive or negative?

26. 26 Partner Relationship Marketing Partners inside the firm –All employees must be customer-focused –Teams coordinate efforts toward customers Partners outside the firm –Supply chain management (strengthening connections with partners from raw materials to final products) –Strategic alliances (for example Dell has partnered with Microsoft and Intel)

27. 27 Step 5: Step 5: Capture value from Customers By creating highly satisfied customers who stay loyal and buy more, the firm sees greater long-term returns.

28. 28 Loyalty & Retention Customer Lifetime Value: the value of the entire stream of purchases a customer would make over his or her lifetime. Customer Equity: total customer lifetime values of all of the company’s customers. Share of Customer: the percentage of the customer’s purchasing in the company’s product category. Example: 30% of your beverage purchases may go to Coca-Cola. Lexus estimates that every one satisfied & loyal customer is worth $600k in lifetime sales. Taco Bell estimates its customer lifetime value to be $12,000.

29. 29 Customer Relationship Groups Butterflies Good fit between company’s offerings and customer’s needs True Friends Good fit between company’s offerings and customer’s needs Strangers Little fit between company’s offerings and customer’s needs Barnacles Little fit between company’s offerings and customer’s needs High Profitability Low Profitability Short-Term CustomersLong-Term Customers Spend a lot but shop around – use promotions to target them Profitable & loyal. Come back regularly and tell others about good experiences Don’t invest in them Customer who doesn’t spend enough to make it worth it to keep him

30. 30 Video Case Subaru (10 minutes)

31. 31 Thoughts Can a company have a relationship with a customer? How does Subaru communicate with its customers? What does each party get from the relationship?