Marketing chapter 1 (1) Marketing Management

Marketing in the Twenty-First Marketing in the Twenty-First CenturyCentury

Change is occurring at an accelerating rate; today is not like Change is occurring at an accelerating rate; today is not like yesterday, and tomorrow will be different from today. yesterday, and tomorrow will be different from today. Continuing today’s strategy is risky; so is turning to a new Continuing today’s strategy is risky; so is turning to a new strategy. Therefore, tomorrow’s successful companies will strategy. Therefore, tomorrow’s successful companies will have to heed three certainties:have to heed three certainties:➤➤Global forces will continue to affect everyone’s business Global forces will continue to affect everyone’s business and personal life.and personal life.

➤ ➤ Technology will continue to advance and amaze us.Technology will continue to advance and amaze us. ➤ ➤ There will be a continuing push toward deregulation of the There will be a continuing push toward deregulation of the

economic sector.economic sector.These three developments—globalization, technological These three developments—globalization, technological advances, and deregulation—spell endless opportunities. But advances, and deregulation—spell endless opportunities. But what is marketing and what does it have to do with these what is marketing and what does it have to do with these issues?issues?

Definition of MarketingDefinition of Marketing■ ■ What are the tasks of marketing?What are the tasks of marketing?■ ■ What are the major concepts and tools of marketing?What are the major concepts and tools of marketing?■ ■ What orientations do companies exhibit in the marketplace?What orientations do companies exhibit in the marketplace?■ ■ How are companies and marketers responding to the new How are companies and marketers responding to the new

challenges?challenges?Understanding Marketing ManagementUnderstanding Marketing Management

Marketing deals with identifying and meeting human and Marketing deals with identifying and meeting human and social needs. One of the shortest definitions of marketing social needs. One of the shortest definitions of marketing is “meeting needs profitably.” is “meeting needs profitably.” Marketing: Managing Profitable Marketing: Managing Profitable Customer Relationships. Customer Relationships. The two fold goal of marketing is to attract new customers by The two fold goal of marketing is to attract new customers by promising superior value and to keep and grow current customers promising superior value and to keep and grow current customers by delivering satisfaction. Example-Wal-Mart, Sony, IBM and by delivering satisfaction. Example-Wal-Mart, Sony, IBM and Procter etc. Procter etc.

What is MarketingWhat is Marketing

Many people think of marketing only as selling and Many people think of marketing only as selling and advertising. It is only the tip of the marketing advertising. It is only the tip of the marketing iceberg.iceberg.

Sense: Old sense making a sale- “ telling and Sense: Old sense making a sale- “ telling and selling”-but in the new sense of satisfying selling”-but in the new sense of satisfying customer needs.customer needs.

Selling and advertising are only part of a longer “ Selling and advertising are only part of a longer “ marketing mix”- a set of marketing tools that marketing mix”- a set of marketing tools that work together to satisfy customer needs and work together to satisfy customer needs and build customer relationships.build customer relationships.

What is MarketingWhat is Marketing““Marketing” is NOT synonymous with “Sales” or Marketing” is NOT synonymous with “Sales” or

“Advertising”“Advertising”Kotler’s social definition : Marketing is a social and Kotler’s social definition : Marketing is a social and

managerial process by which individuals and groups managerial process by which individuals and groups obtain what they need and want through creating and obtain what they need and want through creating and exchanging value with others.exchanging value with others.As a managerial definition, marketing has often been As a managerial definition, marketing has often been described as “described as “the art of selling products.” the art of selling products.” The aim of marketing is to know and understand the customer The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself.so well that the product or service fits him and sells itself.Ideally, marketing should result in a customer who is ready to Ideally, marketing should result in a customer who is ready to buybuy

Scope of MarketingScope of MarketingMarketing people are involved in marketing 10 types of Marketing people are involved in marketing 10 types of entities: goods, services, experiences, events, persons, places, entities: goods, services, experiences, events, persons, places, properties, organizations, information, and ideas.properties, organizations, information, and ideas.

Many Things can be marketed:Many Things can be marketed: * Goods * Services* Goods * Services * Experiences * Events* Experiences * Events * Persons * Places* Persons * Places * Properties * Organizations* Properties * Organizations * Information * Ideas* Information * Ideas

Core Marketing Concepts:Core Marketing Concepts:

1.Needs. Human needs are states of felt deprivation. 1.Needs. Human needs are states of felt deprivation. (physical needs, social needs, and individual needs)(physical needs, social needs, and individual needs) Needs Needs describe basic human requirements such as describe basic human requirements such as food, air, water, clothing, and shelter. People also food, air, water, clothing, and shelter. People also have strong needs for recreation, education, and have strong needs for recreation, education, and entertainment.entertainment.

Wants: are the form human needs take as they are Wants: are the form human needs take as they are shaped by culture and individual personality. shaped by culture and individual personality.

Demands: Human wants that are backed by buying Demands: Human wants that are backed by buying power. Wants become buying power.power. Wants become buying power.

Core Concepts of MarketingCore Concepts of Marketing

22. Marketing Offers-( Products, Services, and . Marketing Offers-( Products, Services, and Experiences): Some combination of products, Experiences): Some combination of products, services, information or experiences offered to a services, information or experiences offered to a market to satisfy a need or want.market to satisfy a need or want.. A . A product product is any offering that can satisfy a need or is any offering that can satisfy a need or want.want.A A brand brand is an offering from a known source. A brand is an offering from a known source. A brand name such as McDonald’s.name such as McDonald’s.

Marketing offers also include other entities, such as Marketing offers also include other entities, such as persons, places, organizations, information and ideas.persons, places, organizations, information and ideas.


33. Customer Value and Satisfaction: are key building . Customer Value and Satisfaction: are key building blocks for developing and managing customer blocks for developing and managing customer relationship. Satisfied customers buy again and tell relationship. Satisfied customers buy again and tell others about their good experiences. others about their good experiences.

Dissatisfied customers often switch to competitors and Dissatisfied customers often switch to competitors and disparage/criticize the product to others.disparage/criticize the product to others.We define We define value value as a ratio between what the as a ratio between what the customer customer gets gets and what he and what he gives.gives.

Core Concepts of MarketingCore Concepts of Marketing4. Exchanges and Relationships:4. Exchanges and Relationships: Exchange: is the act of obtaining a desired object from Exchange: is the act of obtaining a desired object from

someone by offering something in return.someone by offering something in return.Whether exchange actually takes place depends upon Whether exchange actually takes place depends upon whether the two parties can agree on terms that will leave whether the two parties can agree on terms that will leave them both better off (or at least not worse off) than before. them both better off (or at least not worse off) than before. Exchange is a value-creating process because it normally Exchange is a value-creating process because it normally leaves both parties better off.leaves both parties better off.

Relationships:Relationships: Marketers want to built strong relationships by Marketers want to built strong relationships by consistently delivering superior customer value.consistently delivering superior customer value.Relationship marketing Relationship marketing aims to build long-term mutually satisfying aims to build long-term mutually satisfying relations with key parties—customers, suppliers, distributors—in relations with key parties—customers, suppliers, distributors—in order to earn and retain their long-term preference and business.order to earn and retain their long-term preference and business.


5. Markets: A market is a set of actual and 5. Markets: A market is a set of actual and potential buyers of a product or services.potential buyers of a product or services.Today we can distinguish between a Today we can distinguish between a marketplace marketplace and a and a marketspace. marketspace. The marketplace is physical, as when one goes shopping in The marketplace is physical, as when one goes shopping in a store; marketspace is digital, as when one goes shopping a store; marketspace is digital, as when one goes shopping on the Internet. E-commerce—business transactions on the Internet. E-commerce—business transactions conducted on-line—has many advantages for both conducted on-line—has many advantages for both consumers and businesses, including convenience, savings, consumers and businesses, including convenience, savings, selection, personalization, and information.selection, personalization, and information.

Core ConceCore Conceppts of Marketingts of Marketing

Another core concept is the distinction between Another core concept is the distinction between marketers and prospects. A marketer is someone who marketers and prospects. A marketer is someone who is seeking a response (attention, a purchase, a vote, a is seeking a response (attention, a purchase, a vote, a donation) from another party, called the donation) from another party, called the prospect. prospect. If If two parties are seeking to sell something to each other, two parties are seeking to sell something to each other, both are marketers.both are marketers.

MARKETING MANAGEMENTMARKETING MANAGEMENT

Marketing Management is the art and Marketing Management is the art and science of choosing target markets and science of choosing target markets and building profitable relationships with building profitable relationships with them” them” What customers will we serve (What’s our What customers will we serve (What’s our target market) and How can we serve these target market) and How can we serve these customers best ( What’s our value customers best ( What’s our value proposition?)proposition?)Creating, delivering and communicating Creating, delivering and communicating superior customer value is key. superior customer value is key.

MARKETING MANAGEMENTMARKETING MANAGEMENTMarketing Management is the analysis, planning, implementation and Marketing Management is the analysis, planning, implementation and

control of programs designed to create, build and maintain control of programs designed to create, build and maintain beneficial exchanges with target buyers for the purpose of beneficial exchanges with target buyers for the purpose of achieving organizational objectives.achieving organizational objectives.Marketing (management) Marketing (management) is the process of planning and is the process of planning and executing the conception, pricing, promotion, and distribution of executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy ideas, goods, and services to create exchanges that satisfy individual and organizational goals.individual and organizational goals.Coping with exchange processes—part of this definition—calls for Coping with exchange processes—part of this definition—calls for a considerable amount of work and skill. We see marketing a considerable amount of work and skill. We see marketing management as the art and science of applying core marketing management as the art and science of applying core marketing concepts to choose target markets and get, keep, and grow concepts to choose target markets and get, keep, and grow customers through creating, delivering, and communicating customers through creating, delivering, and communicating superior customer value.superior customer value.

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MARKETING MANAGEMENTMARKETING MANAGEMENT(A Broad view of Marketing Task)(A Broad view of Marketing Task)

1.Customer Management:1.Customer Management:• Marketers select customers that can be Marketers select customers that can be

served well and profitably.served well and profitably.2.Demand Management:2.Demand Management:• Marketers must deal with different Marketers must deal with different

demand states ranging from no demand states ranging from no demand to too much demand.demand to too much demand.

Eight different states of demandEight different states of demandJust as production and logistics professionals are Just as production and logistics professionals are responsible for supply management, marketers are responsible for supply management, marketers are responsible for demand management. They may have to responsible for demand management. They may have to manage -manage -negative demand (avoidance of a product), negative demand (avoidance of a product), no demand (lack of awareness or interest in a product), no demand (lack of awareness or interest in a product), latent demand (a strong need that cannot be satisfied by latent demand (a strong need that cannot be satisfied by existing products), existing products), declining demand (declining demand (lower demand), lower demand), irregular demand (demand varying by season, day, or hour), irregular demand (demand varying by season, day, or hour), full demand (a satisfying level of demand), full demand (a satisfying level of demand), overfull demand (more demand than can be handled), or overfull demand (more demand than can be handled), or unwholesome demand (demand for unhealthy or dangerous products). unwholesome demand (demand for unhealthy or dangerous products).

A Broadened View of Marketing TasksA Broadened View of Marketing Tasks

To meet the organization’s objectives, marketing To meet the organization’s objectives, marketing managers seek to influence the level, timing, and managers seek to influence the level, timing, and composition of these various demand states.composition of these various demand states.

1. Negative demand 2. No demand1. Negative demand 2. No demand3. latent demand 4. Declining demand 3. latent demand 4. Declining demand 5. Irregular demand 6. Full demand5. Irregular demand 6. Full demand7. Overfull demand 8.Unwholesome demand 7. Overfull demand 8.Unwholesome demand

Marketing Management OrientationMarketing Management Orientation

What philosophy should guide marketing What philosophy should guide marketing strategies?strategies?What weight should be given to the interests of What weight should be given to the interests of customers, the organization and society?customers, the organization and society?

There are six alternative concepts under which There are six alternative concepts under which organizations design and carry out their organizations design and carry out their marketing strategies: the production, product, marketing strategies: the production, product, selling, marketing and societal marketing and selling, marketing and societal marketing and holistic marketing concepts.holistic marketing concepts.

Management OrientationManagement Orientation1.1. The Production Concept: holds that consumers will favor The Production Concept: holds that consumers will favor

products that are available and highly affordable. Therefore, products that are available and highly affordable. Therefore, management should focus on improving production and management should focus on improving production and distribution efficiency.distribution efficiency.The The production concept, production concept, one of the oldest in business, holds one of the oldest in business, holds that consumers prefer products that are widely available and that consumers prefer products that are widely available and inexpensive. Managers of production-oriented businesses inexpensive. Managers of production-oriented businesses concentrate on achieving high production efficiency, low concentrate on achieving high production efficiency, low costs, and mass distribution.costs, and mass distribution.

This concept is still a useful philosophy in two types of This concept is still a useful philosophy in two types of situations: (i) When the demand for a product exceeds the situations: (i) When the demand for a product exceeds the supply and (ii) When the product cost is too high and supply and (ii) When the product cost is too high and improved productivity is needed to bring it down.improved productivity is needed to bring it down.

Management OrientationManagement Orientation

2. The Product Concept: holds that 2. The Product Concept: holds that consumers will favor products that offer consumers will favor products that offer the most in quality, performance, and the most in quality, performance, and innovative features, and that the innovative features, and that the organization should devote its energy to organization should devote its energy to making continuous product improvement making continuous product improvement by designs, packages, prices and better by designs, packages, prices and better product. For example- users wanted train product. For example- users wanted train rather than transportation.rather than transportation.


3. The Selling concept: holds that consumers 3. The Selling concept: holds that consumers will not buy enough of the firm’s products will not buy enough of the firm’s products unless it undertakes a large-scale selling unless it undertakes a large-scale selling and promotion effort. and promotion effort.

The concept is typically practiced with The concept is typically practiced with unsought goods or unwanted goods those unsought goods or unwanted goods those that buyers do not normally think of buying. that buyers do not normally think of buying. Example-insurance and blood donations.Example-insurance and blood donations.


04.The Marketing Concept: holds that organizational 04.The Marketing Concept: holds that organizational goals depends on knowing the needs and wants of goals depends on knowing the needs and wants of target markets and delivering the desired target markets and delivering the desired satisfactions better than competitors do.satisfactions better than competitors do.

Under the concept, customer focus and value are the Under the concept, customer focus and value are the paths to sales and profits.paths to sales and profits.

• It views marketing not as “hunting” but as “ It views marketing not as “hunting” but as “ gardening”gardening”The marketing concept rests on four pillars: The marketing concept rests on four pillars: target target market, customer needs, integrated marketing, market, customer needs, integrated marketing, and and profitability. profitability.

Marketing ConceptsMarketing Concepts

Customer NeedsCustomer NeedsA company can carefully define its target market yet fail A company can carefully define its target market yet fail to correctly understand the customers’ needs. Clearly, to correctly understand the customers’ needs. Clearly, understanding customer needs and wants is not always understanding customer needs and wants is not always simple.simple.Some customers have needs of which they are not fully Some customers have needs of which they are not fully conscious; some cannotconscious; some cannotarticulate these needs or use words that require some articulate these needs or use words that require some interpretation. We can distinguish among five types of interpretation. We can distinguish among five types of needs: (1) stated needs, (2) real needs, (3) unstated needs, needs: (1) stated needs, (2) real needs, (3) unstated needs, (4) delight needs, and (5) secret needs.(4) delight needs, and (5) secret needs.


The fig contrasts the selling concept and marketing The fig contrasts the selling concept and marketing concept:concept:

Starting point Focus Means EndsStarting point Focus Means Ends Factory Existing Selling and Profit throughFactory Existing Selling and Profit through products promotion sales volumeproducts promotion sales volume * The Selling Concept* The Selling ConceptMarket Customer Integrated Profit throughMarket Customer Integrated Profit through needs marketing customerneeds marketing customer satisfactionsatisfaction *The Marketing Concept*The Marketing Concept

Integrated MarketingIntegrated MarketingWhen all of the company’s departments work together to serve the When all of the company’s departments work together to serve the customers’ interests , the result is customers’ interests , the result is integrated marketing. integrated marketing. Integrated Integrated marketing takes place on two levels.marketing takes place on two levels.First, the various marketing functions—sales force, advertising, First, the various marketing functions—sales force, advertising, customer service, product management, marketing research—must customer service, product management, marketing research—must work together. All of these functions must be coordinated from the work together. All of these functions must be coordinated from the customer’s point of view.customer’s point of view.Second, marketing must be embraced by the other departments.Second, marketing must be embraced by the other departments.External marketing External marketing is marketing directed at people outside the is marketing directed at people outside the company. company. Internal marketing Internal marketing is the task of hiring, training, and is the task of hiring, training, and motivating able employees who want to serve customers well. In motivating able employees who want to serve customers well. In fact, internal marketing must precede external marketing. It makes no fact, internal marketing must precede external marketing. It makes no sense to promise excellent service before the company’s staff is sense to promise excellent service before the company’s staff is ready to provide it.ready to provide it.

Practice the marketing conceptPractice the marketing concept

How many companies actually practice the marketing How many companies actually practice the marketing concept? Unfortunately, too few. Only a handful of concept? Unfortunately, too few. Only a handful of companies stand out as master marketers: Procter &companies stand out as master marketers: Procter &Gamble, Disney, Nordstrom, Wal-Mart, Milliken & Gamble, Disney, Nordstrom, Wal-Mart, Milliken & Company, McDonald’s, Marriott Hotels, American Company, McDonald’s, Marriott Hotels, American Airlines, and several Japanese (Sony, Toyota, Canon) Airlines, and several Japanese (Sony, Toyota, Canon) and European companies (IKEA, Club Med, Nokia, and European companies (IKEA, Club Med, Nokia, ABB, Marks & Spencer). These companies focus on ABB, Marks & Spencer). These companies focus on the customer and are organized to respond effectively the customer and are organized to respond effectively to changing customerto changing customer


5. The Societal Marketing Concept: holds that 5. The Societal Marketing Concept: holds that marketing strategy should deliver value to marketing strategy should deliver value to customers in a way that maintains or improves customers in a way that maintains or improves both the consumer’s and society’s well-being.both the consumer’s and society’s well-being.

Companies should balance three considerations Companies should balance three considerations in setting their marketing strategies: company in setting their marketing strategies: company profits, customer wants/satisfaction, and profits, customer wants/satisfaction, and society’s interests (Human welfare). society’s interests (Human welfare).


6. The Holistic Marketing concept: is based on 6. The Holistic Marketing concept: is based on the development, design, and the development, design, and implementation of marketing programs, implementation of marketing programs, processes and activities that recognizes processes and activities that recognizes their breadth and interdependencies.their breadth and interdependencies.

Four broad components charactering holistic Four broad components charactering holistic marketing:marketing:

a.a. Relationship marketingRelationship marketingb.b. Integrated marketingIntegrated marketingc.c. Internal marketing andInternal marketing andd.d. Performance marketingPerformance marketing

The Holistic Marketing ConceptThe Holistic Marketing Concept

1. Relationship Marketing: is the aim to build 1. Relationship Marketing: is the aim to build mutually satisfying long-term relationships mutually satisfying long-term relationships with key constituents/necessary in order to with key constituents/necessary in order to earn and retain their business. Four key earn and retain their business. Four key constituents marketing are customers, constituents marketing are customers, employees, marketing partners (channels, employees, marketing partners (channels, suppliers, distributors, dealers, agencies)suppliers, distributors, dealers, agencies)

The Holistic Marketing ConceptThe Holistic Marketing Concept

2. Integrated Marketing: The marketer’s task 2. Integrated Marketing: The marketer’s task is to devise/to plan marketing activities is to devise/to plan marketing activities and assemble/to gather fully integrated and assemble/to gather fully integrated marketing programs to create, marketing programs to create, communicate, and deliver value for communicate, and deliver value for consumers. Mc Carthy classified these consumers. Mc Carthy classified these activities as marketing mix, which he activities as marketing mix, which he called four Ps of marketing: product, price, called four Ps of marketing: product, price, place and promotionplace and promotion

Marketing MixMarketing MixMarketing mix Marketing mix is the set of marketing toolsis the set of marketing toolsthat the firm uses to pursue its marketing that the firm uses to pursue its marketing objectives in the target market.objectives in the target market.McCarthy classified these tools into four broad McCarthy classified these tools into four broad groups that he called the four Ps of marketing: groups that he called the four Ps of marketing: product, price, place, and promotion product, price, place, and promotion The four P components of the marketing mix are:The four P components of the marketing mix are:

1.1. Product: Product variety, quality, design, Product: Product variety, quality, design, features, brand name, packaging, sizes, service, features, brand name, packaging, sizes, service, warranties and returns.warranties and returns.

2.2. Price: list price, discounts, allowances, payment Price: list price, discounts, allowances, payment period and credit terms. period and credit terms.

Marketing MixMarketing Mix

3. Place: Channels, coverage, assortments, 3. Place: Channels, coverage, assortments, locations inventory and transportation.locations inventory and transportation.

4. Promotion: Sales promotion, Advertising, 4. Promotion: Sales promotion, Advertising, Public relations and Direct marketing Public relations and Direct marketing

The four Ps represent the seller’s view of the The four Ps represent the seller’s view of the marketing tools available for influencing marketing tools available for influencing buyers. Its four dimensions (SIVA) and buyers. Its four dimensions (SIVA) and the corresponding customer questions the corresponding customer questions these are designed to answer are:these are designed to answer are:

Marketing MixMarketing Mix

I.I. Solution: How can I solve my Solution: How can I solve my problem?problem?

II.II. Information: Where can I learn more Information: Where can I learn more about it?about it?

III.III. Value: What is my total sacrifice to get Value: What is my total sacrifice to get their solution?their solution?

IV.IV. Access: Where can I find it? Access: Where can I find it?

Holistic Marketing ConceptHolistic Marketing Concept

3. Internal Marketing: is the task of hiring, 3. Internal Marketing: is the task of hiring, training and motivating able employees training and motivating able employees who want to serve customers well.who want to serve customers well.

Internal marketing must take place on two Internal marketing must take place on two levels: first level- the various marketing levels: first level- the various marketing functions- sales forces, advertising, functions- sales forces, advertising, customer service, product management, customer service, product management, marketing research must work together.marketing research must work together.

Holistic Marketing ConceptHolistic Marketing Concept At the second level, other departments At the second level, other departments

must embrace marketing; they must must embrace marketing; they must also “think customer”.also “think customer”.

Holistic Marketing ConceptHolistic Marketing Concept

4. Performance Marketing: Holistic 4. Performance Marketing: Holistic marketing incorporates performance marketing incorporates performance marketing and understanding the marketing and understanding the returns to the business from marketing returns to the business from marketing activities and programs, as well as activities and programs, as well as addressing broader concerns and their addressing broader concerns and their legal, ethical, social and environmental legal, ethical, social and environmental effects.effects.

CRMCRM

CRM-Customer Relationships MarketingCRM-Customer Relationships Marketing““is the overall process of building and is the overall process of building and

maintaining profitable customer relationships maintaining profitable customer relationships by delivering superior customer value and by delivering superior customer value and satisfaction”.satisfaction”.

It costs 5 to 10 items MORE to attract a new It costs 5 to 10 items MORE to attract a new customer than it does to keep a current customer than it does to keep a current customer satisfied.customer satisfied.

Marketers must be concerned with the lifetime Marketers must be concerned with the lifetime value of the customer.value of the customer.

CRMCRM

KEY Concepts:KEY Concepts:1.1. Attracting, retaining and growing Attracting, retaining and growing

customerscustomersa) Customer value/satisfaction: The a) Customer value/satisfaction: The

difference between total customer value difference between total customer value and total customer cost.and total customer cost.

CRMCRM

Customer satisfaction depends on the product’s Customer satisfaction depends on the product’s perceived performance relative to a buyer’s perceived performance relative to a buyer’s expectations. Hereexpectations. Here

*perceptions are key*perceptions are key*Meeting/exceeding*Meeting/exceeding*expectations creates satisfaction*expectations creates satisfactionb) Loyalty and retention: Good customer b) Loyalty and retention: Good customer

relationship management creates customer relationship management creates customer delight. In turn, delighted customers remain loyal delight. In turn, delighted customers remain loyal and talk favorably to others about the company and talk favorably to others about the company and its products.and its products.

CRMCRM

Studies show big differences in the loyal of customers Studies show big differences in the loyal of customers who are less satisfied, somewhat satisfied, and who are less satisfied, somewhat satisfied, and completely satisfied. So loyalty increases satisfaction completely satisfied. So loyalty increases satisfaction level and delights consumers should be the goal.level and delights consumers should be the goal.

c. Growing share of customer: The portion of the c. Growing share of customer: The portion of the customer’s purchasing that a company gets its customer’s purchasing that a company gets its product categories. Super markets and restaurants product categories. Super markets and restaurants want to get more “ share of stomach”. Car want to get more “ share of stomach”. Car companies want to increase “share of garage” and companies want to increase “share of garage” and air lines want greater “ share of travel”.air lines want greater “ share of travel”.

CRMCRM

2. Building customer relationships and customer 2. Building customer relationships and customer equityequity

a)a) Customer equity: is the total combined Customer equity: is the total combined customer lifetime values of all customers. customer lifetime values of all customers. Clearly, the more loyal the firm’s profitable Clearly, the more loyal the firm’s profitable customers, the higher the firm’s customer customers, the higher the firm’s customer equity.equity.

b)b) Customer relationship levels and tools: Target Customer relationship levels and tools: Target market typically dictates type of relationship.market typically dictates type of relationship.

*Basic relationships*Basic relationships*Full relationships*Full relationships

CRMCRM

c) Customer loyalty and retention programs:c) Customer loyalty and retention programs:*Adding financial benefits*Adding financial benefits*Adding social benefits*Adding social benefits*Adding structural ties*Adding structural ties

Marketing Challenges of the New Marketing Challenges of the New MillenniumMillennium

We examine the major trends and forces We examine the major trends and forces that are changing the marketing that are changing the marketing landscape and challenging marketing landscape and challenging marketing strategy. The four major developments strategy. The four major developments are causing marketplace changes; such are causing marketplace changes; such as-as-

1.the new digital age (Internet), 1.the new digital age (Internet), 2. rapid globalization, 2. rapid globalization, 3. the call for more ethics and social 3. the call for more ethics and social

responsibilities and responsibilities and 4.the growth in not-for-profit marketing4.the growth in not-for-profit marketing

Marketers Responding to Marketers Responding to Marketing Challenges Marketing Challenges

Connecting Millennium:Connecting Millennium:1.a) Via technology: advances in computers, 1.a) Via technology: advances in computers,

telecommunications, video-conferencing, telecommunications, video-conferencing, etc, are major forces.etc, are major forces.

*Databases allow for customization of products, *Databases allow for customization of products, messages and analysis of needs.messages and analysis of needs.

b) The Internet: (i) Facilities anytime, anywhere b) The Internet: (i) Facilities anytime, anywhere connections. ii) Facilities CRM iii) Creates connections. ii) Facilities CRM iii) Creates market spaces.market spaces.

Marketers Responding to Marketers Responding to Marketing Challenges Marketing Challenges

Connecting:Connecting:2. With Customers:2. With Customers:a) Selective relationship management is keya) Selective relationship management is key .Customer profitability analysis separates .Customer profitability analysis separates

winners from losers.winners from losers.b) Growing “share of customer”b) Growing “share of customer”• Cross-selling and up-selling are helpful.Cross-selling and up-selling are helpful.c) Direct sales to buyers are growingc) Direct sales to buyers are growing

Marketers Responding to Marketers Responding to Marketing ChallengesMarketing Challenges

3. With marketing partners:3. With marketing partners:a)a) Partner relationship management Partner relationship management

involves:involves:i)i) Connecting inside the companyConnecting inside the companyii)ii) Connecting with outside partnersConnecting with outside partners *Supply chain management*Supply chain management *Strategic alliances *Strategic alliances

Marketers Responding to Marketers Responding to Marketing ChallengesMarketing Challenges

4.With the world:4.With the world:a)a) GlobalizationGlobalization*Competition*Competition*New opportunities*New opportunitiesb) Greater concern for environmental and social b) Greater concern for environmental and social

responsibilitiesresponsibilitiesc) Increased marketing by non profit and public c) Increased marketing by non profit and public

sector entitiessector entities* Social marketing campaign.* Social marketing campaign.

Marketing chapter 1 (1) Marketing Management

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Transcript of Marketing chapter 1 (1) Marketing Management