7/13/2008

Marketing: Managing
Profitable Customer
Relationships

Chapter 1

Objectives

Be able to define marketing and

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

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Objectives

Understand customer
relationship management
and strategies.
Realize the major challenges
facing marketers in the new
“connected” millennium.

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What is Marketing?

Marketing is managing profitable

customer relationships
ƒ Attracting new customers
ƒ Retaining and growing current
customers
t
“Marketing” is NOT synonymous
with “sales” or “advertising”
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What is Marketing?

Kotler’s social definition:

“Marketing is a social and
managerial process by which
individuals and groups obtain
what
h t they
th need d and
d wantt through
th h
creating and exchanging products
and value with others.”

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What Can Be
Marketed?
Goods
S i
Services
Places
Ideas
Events
Persons
Properties
Organizations
Information
Experiences
What is being
marketed in this ad?
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Figure 1-1:
Core Marketing Concepts

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Discussion Question

Resellers are a primary

market for Nike’s
products.
Describe the exchange
process between Nike
and resellers.

Think beyond the obvious.

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Figure 1-2:
Elements of a
Modern
ode Marketing
a e g System
ys e

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Marketing Management

M k ti managementt is
Marketing i “the
“th
art and science of choosing
target markets and building
profitable relationships with
them ”
them.
ƒ Creating, delivering and
communicating superior
custome
custom er value is key.
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Marketing Management

Customer
C t Management:
M t
ƒ Marketers select customers that
can be served well and profitably.
Demand Management:
ƒ Marketers must deal with different
demand states, ranging from no
demand to too much demand.

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Marketing Management

Demarketing:
Commuter
Connections
promotes the use
of mass transit
and carpooling as
an alternative to
driving alone.
alone

Commuter
Connections
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Marketing Management

Production Management Product

Concept Orientations Concept

Selling Marketing
C
Concept t C
Concept t
Societal
Marketing
Concept

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Figure 1-3:
The Selling and Marketing
Concepts Contrasted

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Figure 1-4:
Considerations Underlying the
Societal Marketing Concept

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Figure 1-5:
Relationship Between Customer
Satisfaction and Loyalty

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CRM

Customer
C t relationship
l ti hi
management (also called CRM)
is defined as:
“the overall process of building
andd maintaining
i t i i profitable
fit bl
customer relationships by
delivering superior customer
value and satisfaction.”
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CRM

t 5 to
It costs t 10 times
ti MORE tto
attract a new customer than it
does to keep a current
customer satisfied.
Marketers must be
concerned with the
lifetime value of the
customer..
customer
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CRM
Customer value and
Key Concepts satisfaction
ti f ti
ƒ Perceptions are key
Attracting, ƒ Created by meeting/
exceeding expectations
retaining and Loyalty and retention
growing ƒ Many benefits of loyalty
customers ƒ Increases as satisfaction
levels increase
Building ƒ Delighting consumers
relationships and should be the goal
customer equity Growing customer share
ƒ Cross
Cross--selling
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CRM
Key Concepts C t
Customer it
equity
ƒ Total combined
Attracting, customer lifetime
retaining and values of all
growing customers
customers
custo es ƒ Measures firm’s
firm s
Building performance, but in
relationships and a manner that looks
customer equity to the future

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CRM
Customer relationship
Key Concepts levels and tools
ƒ Target market typically
Attracting, dictates type of
retaining and relationship
™ Basic relationships
growing ™ Full relationships
customers ƒ Customer loyalty and
Building retention programs
relationships and ™ Adding financial
benefits
customer equity ™ Adding social benefits
™ Adding structural ties

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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
Connecting..

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Figure 1-6:
Today’s Marketing Connections

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Marketing Challenges
Connecting Advances in computers,
telecommunications,
video--conferencing, etc.
video
are major forces
Via technology ƒ Databases allow for
customization of
With customers products, messages
and analysis of needs
With marketing
The Internet
partners ƒ Facilitates anytime,
With the world anywhere connections
ƒ Facilitates CRM
ƒ Creates marketspaces

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Marketing Challenges
Connecting Selective relationship
management is key
ƒ Customer profitability
Via technology analysis separates
winners from losers
With customers Growing “share of
With marketing customer”
ƒ Cross-
Cross-selling and upup--
partners selling are helpful
With the world Direct sales to
buyers are growing

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Marketing Challenges
Connecting P t
Partner l ti hi
relationship
management
involves:
Via technology ƒ Connecting inside
With customers the company
With marketing ƒ Connecting with
outside partners
partners ™ Supply chain
With the world management
™ Strategic alliances

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Marketing Challenges
Connecting Globalization
ƒ Competition
ƒ New opportunities
Via technology Greater concern for
With customers environmental and
social responsibility
With marketing
Increased marketing
partners by nonprofit and
With the world public--sector entities
public
ƒ Social marketing
campaigns
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Connecting with
Values . . .
The
e Body
ody S
Shop
op
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
The Body Shop
impact “the bottom line”?

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Amazon
c

Strong sales, no Provides great

profits selection, good
Customer--driven
Customer value, discovery
to its core as well as
Each customer
customer’s
s convenience
experience is A true online
unique community

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