1. Marketing: Managing Profitable Customer Relationships Chapter 1

2. 1 - 1 Strong sales, no profits Customer-driven to its core Each customer’s experience is unique Provides great selection, good value, discovery as well as convenience A true online community c Amazon

3. 1 - 2 Objectives Be able to define marketing and discuss its core concepts. Be able to define marketing management and compare the five marketing management orientations.

4. 1 - 3 Objectives Understand customer relationship management and strategies. Realize the major challenges facing marketers in the new “connected” millennium.

5. Why Study Marketing? You are paying a lot for it.  it is estimated that marketing costs consumers 50 cents of each dollar spent. It effects almost every aspect of your daily life Your future job requires that you work with marketers -

6. 1 - 5 What is Marketing? Process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others. Simply put: Marketing is the delivery of customer satisfaction at a profit.

7. 1 - 6 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”

8. 1 - 7 What Can Be Marketed? GoodsServicesPlacesIdeasEventsPersonsPropertiesOrganizationsInformationExperiences What is being marketed in this ad?

9. 1 - 8 Core Marketing Concepts* (Fig. 1-1) Needs, wants, and demands Products and services Value, satisfaction, and quality Exchange, transactions, and relationships Markets

10. 1 - 9 Needs - state of felt deprivation for basic items such as food and clothing and complex needs such as for belonging. i.e. I am hungry. Wants - form that a human need takes as shaped by culture and individual personality. i.e. I want a hamburger, French fries, and a soft drink. Demands - human wants backed by buying power. i.e. I have money to buy this meal. What are Consumer’s Needs, Wants and Demands?

11. Types of Need physical needs  food, clothing, shelter social needs  belonging, acceptance individual needs  knowledge, self-esteem

12. 1 - 11 Market = Aggregation of Needs People Who Exhibit Need Resources to Exchange Willingness to Exchange Unexpected Situational Factors Attitudes of Others Ethical Potential Buyers Market – Buyers who share a particular need or want that can be satisfied through exchange or relationships. Actual Buyers

13. 1 - 12 Products Anything that can be Offered to a Market to Satisfy a Need or Want Experiences Persons Places Organizations Ideas Information What Will Satisfy Consumer’s Needs and Wants? Services Activities or Benefits Offered for Sale That Are Essentially Intangible and Don’t Result in the Ownership of Anything

14. 1 - 13 ExchangesTransactions Relationships* Building a Marketing Network Consisting of The Company and All Its Supporting Stakeholders How Do Consumers Obtain Products and Services?

15. Exchange* something for something: QUID PRO QUO - a basic concept in marketing requires at least two parties each must have something of value to the other Free to accept/reject the offer Must be able to communicate and deliver

16. No Exchange = Self Sufficiency If you can produce everything you need you don't need exchange....  Hermits, Old Order Oregonians, Survivalist

17. 1 - 16 How Do Consumers Choose Choose Among Products and Services? Customer Loyalty Product’s Perceived Performance in Delivering Value Relative to Buyer’s Expectations is Customer Satisfaction Value Gained From Owning a Product and Costs of Obtaining the Product is Customer Value

18. 1 - 17 Figure 1-2: Elements of a Modern Marketing System

19. 1 - 18 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.

20. 1 - 19 Marketing Management Customer 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.

21. 1 - 20 Marketing Management Production Concept Product Concept Selling Concept Marketing Concept Societal Marketing Concept Management Orientations

22. 1 - 21 Figure 1-3: The Selling and Marketing Concepts Contrasted

23. 1 - 22 Figure 1-4: Considerations Underlying the Societal Marketing Concept

24. 1 - 23 Figure 1-5: Relationship Between Customer Satisfaction and Loyalty

25. 1 - 24 CRM Customer relationship management (also called CRM) is defined as: “the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.”

26. 1 - 25 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.

27. 1 - 26 SatMetrix Video Clip View what the experts have to say about customer loyalty and the bottom line. BusinessNow Click the picture above to play video

28. 1 - 27 CRM Attracting, retaining and growing customers Building relationships and customer equity Customer value and satisfaction  Perceptions are key  Created by meeting/ exceeding expectations Loyalty and retention  Many benefits of loyalty  Increases as satisfaction levels increase  Delighting consumers should be the goal Growing customer share  Cross-selling Key Concepts

29. 1 - 28 CRM Customer equity  Total combined customer lifetime values of all customers  Measures firm’s performance, but in a manner that looks to the future Attracting, retaining and growing customers Building relationships and customer equity Key Concepts

30. 1 - 29 CRM 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 Attracting, retaining and growing customers Building relationships and customer equity Key Concepts

31. 1 - 30 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.

32. 1 - 31 Figure 1-6: Today’s Marketing Connections

33. 1 - 32 Marketing Challenges Via technology With customers With marketing partners With the world 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 Connecting

34. 1 - 33 Marketing Challenges 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 Connecting

35. 1 - 34 Marketing Challenges 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 Connecting

36. 1 - 35 Marketing Challenges Globalization  Competition  New opportunities Greater concern for environmental and social responsibility Increased marketing by nonprofit and public-sector entities  Social marketing campaigns Via technology With customers With marketing partners With the world Connecting

37. 1 - 36 Visit the “Our Values” and “About Us” sections of The Body Shop’s web site. How might the values espoused by the company influence the manner in which the Body Shop... Chooses their strategic partners? Advertises fragrances to consumers? Develops new products? How might these decisions in turn impact “the bottom line”? The Body Shop Connecting with Values... The Body Shop