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Marketing:Managing Profitable

Customer Relationships

Chapter 1

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Marketing Defined

Marketing is a social and managerial processbywhich individuals and groups obtain what they

need and want through creating and exchanging

value with others

Keywords:

-creating & exchanging value with others.

-not only telling and selling but the sense ofsatisfying customer needs.

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Marketing is aboutmanaging profitable customer

relationships:

Attracting new customers

Retaining and growing current customers

-the customers still keep on buying/using your

product/services.

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Understanding the Marketplace

Need

State of felt deprivation

Not created by marketer-it is basic part of human life

Example: Need food, cloth, safety

Wants

The form of needs as shaped by culture and the individual

Example: Want a Big Mac

Demands

Wants which are backed by buying powerGiven their wants & resources, people demand product with benefitsthat add up to the most value and satisfaction

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Marketing offers

Combination of products, services, information or experiences that satisfy a

need or want

Keywords: Offer may include services, activities, people, places, information

or ideas

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,

dissatisfied customer will tell about she/he experiences to 11 person.

dissatisfied, satisfied and delighted customer.

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Exchange

The act of obtaining a desired object from someone by offeringsomething in return

One exchange is not the goal, relationships with several exchanges

are the goal

Relationships are built through delivering value and satisfaction

Keywords: relationships with exchanges are the goal and how youdelivering value and satisfaction.

Market

Set of actual and potential buyers of a product

Marketers seek buyers that are profitable

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Marketing Management

Marketing management is the art and science of choosing

target markets and building profitable relationships with

them.Keywords:

What customers will we serve?

-based on segmentation and target marketing

How can we serve these customers best?-how you want to differentiate or position your

product in the marketplace.

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Marketing Orientations

Production concept

Consumer: will favor products that available and highly

affordable.

Management: focus on improving production/distribution

efficiency.

This concept will occur if product exceeds the supply:

management should look for ways to increase production. If the

products cost is to high and improved productivity is needed to

bring it down.

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Product concept

Consumer: will favor products that offer the most quality,performance and innovative features.

Marketing strategies: making continuous product improvements.

Ex: shampoo, mousetraps, cameras

Selling concept

Consumer: will not buy enough of firms product unless

undertakes large-scale selling or more promotion effort

Practiced with unsought goods-insurance, blood donation-buyers

do not normally think of buying/using,Marketing strategies:if faces overcapacity, aim to sell what they

make rather than the market wants.

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Marketing concept

Company goal: on knowing the needs/wants of target markets anddelivering the desired satisfaction better than competitors do.

The Societal-Marketing concept

See the conflicts between consumer short run wants and consumer

long run welfare.

Ex: McDonalds-the company should balance the 3 consideration

in marketing strategies: company profit, consumer wants and

society interests.

Stress the honesty, integrity and putting the people (consumer

first) before gain the profit

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The Marketing PlanTransforms the marketing strategy into action

The Marketing Mix8Ps of marketing mix

Set of controllable tactical marketing tools

Marketing tools that the firm uses to pursue its marketing objectives in thetarget market

Product-goods and services (combination) the company offers to the target

markets-product variation, quality, design, features, brand name

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Price

-the amount of money customers have to pay to obtain the product-list price, discount, allowances

Place

-company activities that make the product available to target consumers-channels, locations, coverage

Promotion

-activities that communicate the merits of the product and persuadetarget customers to buy it

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People

-consumers must be educated in order for their expectations of theproduct/service to be managed and employees must be motivated andwell trained in order to ensure that high standards of service aremaintained

Process (Proximity)-as the success of the service is dependent on the total customerexperience a well designed

Physical Aspect

-appearance of the delivery location and the elements provided tomake the service more tangible can enhance the experience. Greatatmosphere, constant reminders of the firms corporate identity help to

build customer awareness and loyalty

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Protection

-

patent (patent holder legal monopoly status), copyright, trademark-work, symbol or device)

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Building Customer Relationships

CRM Customer Relationship Management: the overall process of buildingand maintaining profitable customer relationships by delivering superiorcustomer value and satisfaction.

Keywords: It deals with all aspects of acquiring, keeping and growingcustomers.

Value and SatisfactionPerceived Value

The customers evaluation of the difference between benefits and costs.(You get what you pay)

Customers often do not judge values and costs accurately or objectively.

Customer Satisfaction

Products perceived performance relative to customers expectations.

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Capturing Value from Customers

Customer Loyalty and Retention

Customer delight leads to emotional relationships and loyalty

Customer Lifetime Value (CLV) shows true worth of a customer

Keywords: you will see your loss if the customer switch to your

competitor. The loss is equivalent with the CLV. Therefore, try toretain your customer to capture positive CLV.

Share of Customer

Share of customers purchase in a product category.

Achieved through offering greater variety, cross-sell and up-sell

strategiesKeywords:if you buy one product, you can earn bonus point, whereasyou you can redeem the points to other products.

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Therefore, the customer will buy the product to earn more bonus

point.

Or otherwise, beside selling books, you also can sell accessories,

gifts, toys, etc. ex: Amazon.

Customer Equity

The combined customer lifetime values of all current and potential

customers.Measures a firms performance, but in a manner that looks to the

future.

Choosing the best customers is key

Keywords:not just acquire the customer but keeping and growing

them as well.

Customer equity can be measure of a firms performance from

current sales/market share. High customer that give profit, high

customer equity.

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Marketing ChallengesDigital age

Growth of the Internet

Advances in telecommunications, information, transportation

Customer research and tracking

Product development

Distribution

New advertising tools-Internet, E-Commerce

24/7 marketing through the Internet

Globalization

Geographical and cultural distances have shrunk-borderless

Greater market coverage

More options for purchasing and manufacturing

Increased competition from foreign competitors-pros & cons for SME

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Ethics and social responsibility

Marketers need to take great responsibility for the impact of theiractions

Keywords: seek profit by serving the best long run interest of theircustomers and communities

Not-for-profit marketingMany organizations are realizing the importance of strategicmarketing. Example: Performing arts (museum, orchestras),Government agencies, Colleges,Hospitals, Churches

Marketing relationshipsProfits through managing long-term customer equity

Improve customer knowledge-for your latest product

Target profitable customers

Keep profitable customers

Keywords: retain and maintain the customer relationship