Chapter #1

Marketing: Managing Profitable

Customer Relationships

Course Instructor
Yesmin Sultana
Assistant Professor
Faculty of Business Administration
AIU B
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 Marketing Defined

Marketing is the process by which

companies create value for customers
and build strong customer relationships to
capture value from customers in return.

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 Marketing Defined

Marketing is a social and managerial

process by which individuals and groups
obtain what they need and want, through
creating, offering and exchanging products
(goods and services) of value with others.

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 Needs, Wants &
Demands

Markets Products, Services &

Experiences

Exchange, Transactions &

Value & Satisfaction
Relationships

Core Marketing Concept

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 Customer Needs, Wants, and Demands

• Needs are states of deprivation, The states

of mind
• Physical—food, clothing, warmth, safety
• Social—belonging and affection
• Individual—knowledge and self-expression

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 Customer Needs, Wants, and Demands

Wants are the form that needs take as they are shaped
by culture and individual personality. Wants are
shaped by one’s society and are described in terms
of objects that will satisfy needs.

Demands are wants backed by buying power. To fulfill

demand the affordability of the customers and
willingness to pay for any product is important.

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 Market Offerings—Products, Services, and
Experiences

Market Offerings are some combination of products,

services, information, or experiences offered to a
market to satisfy a need or want.
- Physical Products, Services, Experience, Events,
Persons, Places, Ideas, Information and Properties.

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 Goods
Goods Services
Services Events
Events

Experiences
Experiences Persons
Persons Places
Places

Organizations
Organizations Information
Information Ideas
Ideas

Properties
Properties

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 Goods Services
Mark Zuckerberg

Persons

Events Experiences

Bill Gates 9
 Organizations
Places

Ideas

Information
Properties
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Understanding the Marketplace
and Consumer Needs

Exchanges, Transactions and

Relationships
Exchange is the act of obtaining a
desired object from someone by
offering something in return.
Transaction is a trade of values
between two or more parties.

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Understanding the Marketplace
and Consumer Needs

Exchanges, Transactions and Relationships

 There are at least two parties.

 Each party has something that might be of value to the other party.
 Each party is capable of communication and delivery.
 Each party is free to reject the exchange offer.
 Each party believes it is appropriate or desirable to deal with the
other party.

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Understanding the Marketplace
and Consumer Needs

Exchanges, Transactions and Relationships

Relationships consist of actions to build and

maintain desirable relationships by
delivering superior value to the customers.

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Understanding the Marketplace
and Consumer Needs
Markets are the set of actual and potential
buyers of a product . These buyers share a
particular need or want that can be
satisfied through exchange relationships.

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Understanding the Marketplace
and Consumer Needs

Marketing System consists of all of the actors (suppliers,

company, competitors, intermediaries, and end users) in
the system who are affected by major environmental forces
• Demographic
• Economic
• Physical/Geographical
• Technological
• Political–legal
• Socio-cultural

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Understanding the Marketplace
and Consumer Needs

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Designing a Customer Driven
Marketing Strategy

Marketing Management

Marketing Management is the art and science

of choosing target markets and building
profitable relationships with them
• What customers will we serve?
• How can we best serve these customers?
• How can we increase our profitability through
satisfying our target customers?

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Designing a Customer Driven
Marketing Strategy

1. Selecting Customers to Serve

Market Segmentation: Dividing the markets into

different segments of customers to identify the
potential sub sets to offer the product or services of
an organization.
Target Marketing: Which segments to go after?
Selecting the appropriate segment/(s) that matches
with the company objectives.

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Designing a Customer Driven
Marketing Strategy
1. Selecting Customers to Serve
De-marketing: Marketing to reduce demand
temporarily or permanently; the aim is not to
destroy demand but to reduce or shift it.
- It reduces the extra load from the peak hours and
make a balance between peak & off peak hours.

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Designing a Customer Driven
Marketing Strategy

2. Choosing a Value Proposition

The Value Proposition is the set of benefits or
values a company promises to deliver to
customers to satisfy their needs.
- To make the customers satisfied and loyal to
the organization a proper balance between
promise and product performances is needed.
• A good hot pizza, delivered to your door
within 30 minutes of ordering, at a
moderate price.
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Designing a Customer Driven
Marketing Strategy

3. Marketing Management Orientations

There are five alternative concepts

under which organizations design and
carry out their marketing strategies.

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Designing a Customer Driven
Marketing Strategy
3. Marketing Management Orientations
Production Concept

Product Concept

Selling Concept

Marketing Concept

Societal Marketing Concept

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Designing a Customer Driven
Marketing Strategy
3. Marketing Management Orientations

Production Concept is the idea that consumers will

favor products that are available or highly
affordable.

- Large production and effective distribution channel

is important
- Price of the products remains relatively low

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Designing a Customer Driven
Marketing Strategy
3. Marketing Management Orientations

Production Concept

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Designing a Customer Driven
Marketing Strategy

3. Marketing Management Orientations

Product Concept is the idea that consumers will favor
products that offer the most quality, performance,
and features for which the organization should
therefore devote its energy to making continuous
improvements

- Research & Development activities and putting

emphasis on customer advices

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Designing a Customer Driven
Marketing Strategy

3. Marketing Management Orientations

Product Concept

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Designing a Customer Driven
Marketing Strategy

3. Marketing Management Orientations

Selling Concept is the idea that consumers will not

buy enough of the firm’s products unless it
undertakes a large scale selling and promotion
effort
- Communicating with the customers properly and
making strong awareness about the products or
services.

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Designing a Customer Driven
Marketing Strategy
3. Marketing Management Orientations
Selling Concept

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Designing a Customer Driven
Marketing Strategy

3. Marketing Management Orientations

Marketing Concept is the idea that achieving

organizational goals depends on knowing the
needs and wants of the target markets and
delivering the desired satisfactions better than
competitors do.
- Customer is the king or queen, so meeting their
demand is most important point to emphasis

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Designing a Customer Driven
Marketing Strategy

3. Marketing Management Orientations

Marketing Concept

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Designing a Customer Driven
Marketing Strategy

3. Marketing Management Orientations

Societal Marketing Concept is the idea that a

company should make good marketing decisions
by considering consumers’ wants, the company’s
requirements, consumers’ long-term interests, and
society’s long-run interests
- Thinking and acting as a member/part of the society
(CSR activities)

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Designing a Customer Driven
Marketing Strategy

3. Marketing Management Orientations

Societal Marketing Concept

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Designing a Customer Driven
Marketing Strategy
3. Marketing Management Orientations
Societal Marketing Concept
Society
(Human Welfare)

Societal
Marketing
Concept

Consumers Company
(Want Satisfaction) (Profits)

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Preparing an Integrated
Marketing Plan and Program
Marketing Mix

The Marketing Mix is the set of tools (four Ps)

the firm uses to implement its marketing
strategy

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Preparing an Integrated
Marketing Plan and Program
Integrated Marketing Program

Integrated Marketing Program is a comprehensive

plan that communicates and delivers the
intended value to chosen customers. Integrated
Marketing Program is a Combination of -
- Advertisement,
Advertisement
- Sales Promotion,
Promotion
- Personal Selling,
Selling
- Public Relations and
- Direct Marketing activities.

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Preparing an Integrated
Marketing Plan and Program

Customer Relationship Management (CRM)

Customer Relationship Management is the overall

process of building and maintaining profitable
customer relationships by delivering superior
customer value and satisfaction.

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Preparing an Integrated
Marketing Plan and Program

Customer Relationship Management (CRM)

Customer Perceived Value is the difference between

total customer value and total customer cost

Customer Satisfaction is the extent to which a

product’s perceived performance matches a buyer’s
expectations

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 Partner Relationship Management

Supply Chain is a channel that stretches

from raw materials to components to
final products to final buyers.

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Creating Customer Loyalty and Retention

Customer Lifetime Value is the value of

the entire stream of purchases that
the customer would make over a
lifetime of patronage (support).

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 Building Customer Equity

Customer Equity is the total combined

customer lifetime values of all of the
company’s customers
- Industry cumulative values for any
kind of product or services.

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