Marketing: Managing Profitable Customer Relationships

Marketing: Managing Profitable Customer Relationships

Objectives

Be able to define marketing and discuss its core concepts. Be able to define marketing management and compare the five marketing management orientations.

1-2

Objectives

Understand customer relationship management and strategies. Provide exposure to marketing mix variables and some marketing functions 1-3

Core Marketing Concepts

1-4

CORE MARKETING CONCEPTS NEED

WANTS

A state of felt deprivation Eg. Physical needs – clothing, food, safety Social needs – belonging, affection Individual needs – knowledge, self expression Maslows Hierarchy of needs

The form that a human need takes as shaped by culture and individual personality OR a desire directed to specific objects that might satisfy a need Eg. Hilfiger shirt, KFC, Massage Service, Oxford University Education etc.

1-5

CORE MARKETING CONCEPTS DEMAND Human wants backed by ability and willingness to pay (buying power) I.e ( I have the money and I am willing to spend it on this item) 1-6

CORE MARKETING CONCEPTS MARKETING OFFERS Some combination of products, services, information or experiences offered to a market to satisfy a need or want

MARKETING OFFERS More broadly it include: Places, persons, organisations, ideas and information Also referred to as non traditional marketing 1-7

What Can Be Marketed? Goods Services Places Ideas Events Persons Properties Organizations Information Experiences

What is being marketed in this ad? 1-8

CORE MARKETING CONCEPTS PRODUCTS Anything that can be offered to a market for attention, acquisition, use, or consumption and that might satisfy a need or want SERVICES Activities or benefits offered for sale that are essentially intangible and do not result in the ownership of anything. Eg. Air travel, hotel, theatre 1-9

CORE MARKETING CONCEPTS CUSTOMER VALUE The difference between the benefit (utility) the customer gains from owning and using a product and the cost of obtaining the product

CUSTOMER SATISFACTION The extent to which a products perceived performance matches a buyers expectation Satisfied/Dissatisfied/Delighted

1 - 10

CORE MARKETING CONCEPTS EXCHANGE The act of obtaining a desired object from someone by offering something in return TRANSACTION A trade of values between two parties Marketing’s unit of measurement

RELATIONSHIP Actions taken to build and maintain desirable exchange relationships with valued customers involving a product, service, idea or other object Marketing Networks

1 - 11

CORE MARKETING CONCEPTS MARKETS A set of actual and potential buyers who share a particular need or want that can be satisfied through an exchange or relationship 1 - 12

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” 1 - 13

What is Marketing?

Kotler’s social definition: “Marketing is 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 - 14

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. 1 - 15

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.

1 - 16

Marketing Management Production Concept Selling Concept

Management Orientations

Societal Marketing Concept

Product Concept Marketing Concept

1 - 17

MARKETING ORIENTATIONS PRODUCTION Consumers will favour products that are widely available and affordable Management should focus on improving production and distribution efficiency

PRODUCT Consumers will favour products that offer the most quality, performance and innovative features Management should focus on making superior products and continuous improvements 1 - 18

MARKETING ORIENTATIONS SELLING Consumers will not buy enough of an organisation’s products unless the organisation aggressively promotes/sells these products

MARKETING Achieving organisational goals depends on determining the needs and wants of target markets and delivering the desired satisfactions more efficiently than competitors do 1 - 19

MARKETING ORIENTATIONS SOCIETAL MARKETING CONCEPT Achieving organisational goals depends on determining the needs and wants of target markets and delivering the desired satisfactions more efficiently than competitors in a way that maintains or improves the customer’s and society’s well-being 1 - 20

Considerations Underlying the Societal Marketing Concept

1 - 21

CRM

Customer relationship management (also called CRM) “the overall process of building is and defined as: maintaining profitable customer relationships by delivering superior customer value and satisfaction.” 1 - 22

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. 1 - 23

CRM Key Concepts Customer value and satisfaction

Attracting, retaining and growing customers

 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

1 - 24

CRM Key Concepts Building relationships and customer equity

Customer equity  Total combined customer lifetime values of all customers  Measures firm’s performance, but in a manner that looks to the future 1 - 25

CRM Key Concepts Building relationships and customer equity

Customer relationship levels and tools  Customer loyalty and retention programs  Adding

financial benefits  Adding social benefits  Adding structural ties

1 - 26

MARKETING MIX A set of controllable tactical marketing tools – product, price, place, and promotion – that the firm blends to produce the response it wants in the target market This is also referred to as the 4Ps Or from the customers standpoint, the 4Cs Customer solution, cost, convenience, communication

1 - 27

MARKETING MIX PRODUCT/CUSTOMER SOLUTION – the goods-and-services combination the company offers to the target market Variety Sizes Quality Design Features Brand name Packaging Services Returns Warranties 1 - 28

MARKETING MIX PRICE/COST – the amount of money the customers have to pay to obtain the product List price Discounts Allowances Payment period Credit terms 1 - 29

MARKETING MIX PLACE/CONVENIENCE – includes company activities to make the make the product available to target customers Channels Coverage Assortments Locations Logistics – warehouse, inventory, transportation 1 - 30

MARKETING MIX PROMOTION/COMMUNICATION – activities that communicate the merits of the product and persuade target customers to buy it Advertising Personal selling Sales promotion Public relations Direct marketing 1 - 31

MARKETING FUNCTIONS Marketing Planning Marketing research Marketing information/ intelligence analysis Environmental Analysis Marketing administration and support Pricing

Advertising and sales promotion Sales and distribution Product/Service development Marketing HR development Procurement Negotiations & Stakeholder relationship management

1 - 32

WHAT’S NEXT!

TUTORIAL: Review concepts – prepare tutorial week 1 questions, case application LECTURE: MARKETING ENVIRONMENT 1 - 33