Marketing: Managing

Profitable Customer
Relationships

Chapter 1
 Learning Goals
1. Define marketing and the marketing process.
2. Explain the importance of understanding
customers and identify the five core
marketplace concepts
3. Identify the elements of a customer-driven
marketing strategy and discuss the
marketing management orientations.
4. Discuss customer relationship management
and creating value for and capturing value
from customers
5. Describe the major trends and forces
changing the marketing landscape

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 What is Marketing?
Marketing Defined:
“Marketing is a social and managerial
process by which individuals and
groups obtain what they need and
want through creating and
exchanging value with others”
Marketing is about managing
profitable customer relationships
 Attracting new customers
 Retaining and growing current
customers
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Goal 1: Define marketing and the marketing process.
 The Marketing Process
A Five-Step Process
1. Understand the marketplace and
customer needs and wants
2. Design a customer-driven marketing
strategy
3. Construct a marketing program that
delivers superior value
4. Build profitable relationships and
create customer delight
5. Capture value from customers to
create profits and customer equity

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Goal 1: Define marketing and the marketing process.
 Understanding the
Marketplace
Core Concepts Need
 State of felt deprivation
Needs, wants, and  Example: Need food
demands
Marketing offers: Wants
including products,  The form of needs as
services and shaped by culture and
experiences the individual
Value and satisfaction  Example: Want a Big
Mac
Exchange, transactions
and relationships Demands
Markets  Wants which are backed
by buying power
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Goal 2: Identify the five core marketplace concepts.
 Understanding the
Marketplace
Core Concepts Marketing offer
Needs, wants, and
demands
Marketing offers:
including products,
services and
experiences
Value and satisfaction
Exchange, transactions
and relationships
Markets
 Combination of
products, services,
information or
experiences that
satisfy a need or
want
 Offer may include
services, activities,
people, places,
information or ideas

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Goal 2: Identify the five core marketplace concepts.
 Understanding the
Marketplace
Core Concepts Value
 Customers form
Needs, wants, and expectations regarding
demands value
Marketing offers:  Marketers must deliver
including products, value to consumers
services and
experiences Satisfaction
 A satisfied customer will
Value and satisfaction
buy again and tell others
Exchange, transactions about their good
and relationships experience
Markets

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Goal 2: Identify the five core marketplace concepts.
 Understanding the
Marketplace
Core Concepts Exchange
Needs, wants, and
demands
Marketing offers:
including products,
services and
experiences
Value and satisfaction
Exchange, transactions
and relationships
Markets
 The act of obtaining a
desired object from
someone by offering
something in return
 One exchange is not the
goal, relationships with
several exchanges are
the goal
 Relationships are built
through delivering value
and satisfaction

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Goal 2: Identify the five core marketplace concepts.
 Understanding the
Marketplace
Core Concepts Market
 Set of actual and
Needs, wants, and potential buyers of a
demands product
Marketing offers:  Marketers seek buyers
including products, that are profitable
services and
experiences
Value and satisfaction
Exchange, transactions
and relationships
Markets

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Goal 2: Identify the five core marketplace concepts.
 Marketing Management
Marketing management is the art
and science of choosing target
markets and building profitable
relationships with them.
 This definition must include answers
to two questions:
• What customers will we serve?
• How can we serve these customers
best?

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Goal 3: Identify elements of a customer-driven strategy.
 Selecting Customers and
Creating Value
Customer Management
 What customers will we serve?
 Marketers select customers that can be
served profitably
Value Proposition
 How can we serve these customers best?
 Includes the set of benefits or values a
company promises to deliver to consumers
to satisfy their needs

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Goal 3: Identify elements of a customer-driven strategy.
 Activity
• You have to start your Own
business and by answering the
Marketing Management two
questions
• What customers will we serve?
• How can we serve these customers
best?

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 Marketing Orientations
Marketing Management
•Production •Selling concept
concept
•Product concept •Marketing concept

• Societal marketing concept

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Goal 3: Identify elements of a customer-driven strategy.
 Marketing Orientations
• Production concept
 The idea that consumers will favor
products that are available and
highly affordable and that the
organization should therefore focus
on improving production and
distribution

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• Product concept
 The idea that consumers will favor
products that offer the most quality,
performance and features and that
the organization should therefore
devote its energies to making
continuous product improvement

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• Selling concept
 The Idea that consumers will not buy
enough of the firm’s product unless it
undertakes a large-scale selling and
promotion effort

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• Marketing Concept
 The marketing philosophy that
achieving organizational goals
depends on knowing the needs and
wants of target markets and
delivering the desired satisfaction
better than competitors

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• Societal Marketing Concept
 A principle of enlightened marketing
that holds that company should
make good marketing decisions by
considering consumers wants, the
company’s requirements, consumers
long run interests and society’s long-
run interest

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 The Marketing Plan
Transforms the marketing strategy
into action
Includes the marketing mix and the
4P’s of marketing
 Product
 Price
 Place
 Promotion
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Goal 3: Identify elements of a customer-driven strategy.
 Building Customer
Relationships
CRM – Customer relationship
management
The overall process of building and
maintaining profitable customer
relationships by delivering superior
customer value and satisfaction. It
deals with all aspects of acquiring,
keeping and growing customers.

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Goal 4: Discuss CRM and capturing value.
 Value and Satisfaction
Perceived Value
 The customer’s evaluation of the
difference between benefits and costs.
 Customers often do not judge values
and costs accurately or objectively.
Customer Satisfaction
 Product’s perceived performance
relative to customer’s expectations.

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Goal 4: Discuss CRM and capturing value.
Creating Customer Value

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 Not All Customers
are Equal
Basic Relationships
 Low-margin customers
Full Partnerships
 Key customers
Selective relationship management
 Weeding out unprofitable customers

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Goal 4: Discuss CRM and capturing value.
 Capturing Value from
Customers
Key Concepts Customer delight
leads to emotional
Customer Loyalty relationships and
and Retention loyalty
Share of Customer Lifetime
Customer Value shows true
Customer Equity worth of a
customer
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Goal 4: Discuss CRM and capturing value.
 Capturing Value from
Customers
Key Concepts Share of customer’s
purchase in a
Customer Loyalty product category.
and Retention Achieved through
Share of offering greater
Customer variety, cross-sell
Customer Equity and up-sell
strategies.
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Goal 4: Discuss CRM and capturing value.
 Capturing Value from
Customers
Key Concepts • The combined
customer lifetime
values of all current
Customer Loyalty and potential
and Retention customers.
• Measures a firm’s
Share of performance, but in a
Customer manner that looks to
Customer Equity the future.
• Choosing the “best”
customers is key
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Goal 4: Discuss CRM and capturing value.
 Marketing Landscape
Challenges Growth of the
Internet
Digital age Advances in
Globalization telecommunications,
information,
Ethics and social transportation
responsibility  Customer research and
tracking
Not-for-profit  Product development
marketing  Distribution
 New advertising tools
Marketing  24/7 marketing through
relationships the Internet
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Goal 5: Discuss trends and forces.
 Marketing Landscape
Challenges Geographical and
Digital age cultural distances
have shrunk
Globalization  Greater market
Ethics and social coverage
responsibility  More options for
purchasing and
Not-for-profit manufacturing
marketing  Increased competition
from foreign
Marketing competitors
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Goal 5: Discuss trends and forces.
 Marketing Landscape
Challenges Marketers need to
Digital age take great
responsibility for the
Globalization
impact of their
Ethics and social
actions
responsibility  Caring capitalism is a
Not-for-profit way to differentiate
marketing your company

Marketing
relationships 1 - 29
Goal 5: Discuss trends and forces.
 Marketing Landscape
Challenges Many organizations
Digital age are realizing the
importance of
Globalization
strategic marketing
Ethics and social  Performing arts
responsibility  Government agencies
Not-for-profit  Colleges
 Hospitals
marketing  Churches
Marketing
relationships 1 - 30
Goal 5: Discuss trends and forces.
 Marketing Landscape
Challenges Profits through
Digital age managing long-term
customer equity
Globalization  Improve customer
Ethics and social knowledge
responsibility  Target profitable
customers
Not-for-profit  Keep profitable
marketing customers
Marketing
relationships 1 - 31
Goal 5: Discuss trends and forces.
 What is Marketing
The process of building profitable
customer relationships by creating
value for customers and capturing
value in return

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