Transcript Chapter 1
1 Marketing: Managing Profitable Customer Relationships 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. 1-1 Marketing Old vs. New Old view of marketing: Making a sale ̶ “Telling and Selling” New view of marketing: Satisfying customer needs 1-2 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. 1-3 A Simple Model of the Marketing Process Create value for customers and build customer relationships Understand the marketplace and customer needs and wants Design a customerdriven marketing strategy Construct a marketing program that delivers superior value Capture value from customers in return Build profitable relationships and create customer delight Capture value from customers to create profits and customer equity 1-4 What are Consumers’ Needs, Wants, and Demands? This Is a Need Needs - state of felt deprivation including physical, social, and individual needs. 1-6 Types of Needs • Physical: – Food, clothing, shelter, safety • Social: – Belonging, affection • Individual: – Learning, knowledge, self-expression 1-7 This Is a Want Wants - form that a human need takes, as shaped by culture and individual personality. 1-8 This Is Demand Wants Buying Power “Demand” 1-9 Need / Want Fulfillment • Needs and Wants Fulfilled through a Marketing Offer : – Some combination of products, services, information, or experiences offered to a market to satisfy a need or want. 1-10 What Satisfies Consumers’ Needs and Wants? Products Anything that can be Offered to a Market to Satisfy a Need or Want Persons Places Information Organizations Ideas Services Activity or Benefit Offered for Sale That is Essentially Intangible and Does Not Result in the Ownership of Anything 1-11 Marketing Myopia • Sellers pay more • attention to the specific products they offer than to the benefits and experiences produced by the products. They focus on the “wants” and lose sight of the “needs.” 1-12 Value and Satisfaction Expectation 8 Performance 10 Expectation Performance 10 8 If performance is lower than expectations, satisfaction is low. If performance is higher than expectations, satisfaction is high. 1-13 Exchange vs. Transaction • Exchange: – Act of obtaining a desired object from someone by offering something in return. • Transaction: – A trade of values between two parties. – One party gives X to another party and gets Y in return. Can include cash, credit, check, or barter. 1-14 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. 1-15 Marketing Management • The art and science of choosing target markets and building profitable relationships with them. Questions to ask: 1. What customers will we serve? What is our target market? 2. How can we best serve these customers? What is our value proposition? 1-16 Segmentation and Target Marketing #1 #2 Market Segmentation: Divide the market into segments of customers Target Marketing: Select the segment to cultivate 1-17 Marketing Management Demand Management Demarketing Finding and increasing demand, also changing or reducing demand such as in demarketing. Temporarily or permanently reducing the number of customers or shifting their demand. 1-18 Value Proposition • The set of benefits or values a company promises to deliver to consumers to satisfy their needs. It cleans and freshens like sunshine! http://www.gainlaundry.com 1-19 Marketing Management Philosophies Societal Marketing Concept Marketing Concept Selling Concept Product Concept Production Concept 1-20 Marketing and Sales Concepts Contrasted 1-21 Societal Marketing Concept 1-22 The Marketing Mix Product Price Customer Needs Promotion Distribution 1-23 Customer Relationship Management • The process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. 1-24 Customer Perceived Value • Customer’s evaluation of the difference between all the benefits and all the costs of a marketing offer relative to those of competing offers. 1-25 Customer Satisfaction • Dependent on the product’s perceived performance relative to a buyer’s expectations. 1-26 Customer Relationship Levels Basic Relationship Continuum Full Partnership 1-27 Loyalty and Retention Social Benefits Financial Benefits Structural Ties 1-28 Partner Relationship Marketing Partners Inside the Firm 1. All employees customer focused 2. Teams coordinate efforts toward customers Partners Outside the Firm 1. Supply chain management 2. Strategic alliances 1-29 Customer Loyalty & Retention • Customer Lifetime Value – The entire stream of purchases that the customer would make over a lifetime of patronage. • Share of Customer – The share a company gets of the customers purchasing in their product categories. 1-30 Customer Equity • Customer equity is the total combined customer lifetime values of all of the company’s customers. 1-31 Customer Relationship Groups Butterflies High Good fit between company’s offerings and customer’s needs; high profit potential True Friends Good fit between company’s offerings and customer’s needs; highest profit potential Profitability Strangers Low Little fit between company’s offerings and customer’s needs; lowest profit potential Barnacles Limited fit between company’s offerings and customer’s needs; low profit potential Short-term customers Long-term customers Projected loyalty 1-32 The Internet • The Internet has been hailed as the technology behind a New Economy. • Marketing applications include: – “click-and-mortar” companies – “click-only” companies – Business-to-business e-commerce • Business-to-business transactions online are expected to reach $4.3 trillion in 2005. • By 2005, 500,000 companies will use the Internet to do business. 1-33 New Marketing Landscape Rapid Globalization Not-for-Profit Marketing Ethics & Social Responsibility New World of Marketing Relationships 1-34