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.

1-2
 Case Study
NASCAR – What is its secret?
Creating Value Capturing Value
• Create compelling blend • Fans spends nearly $700 a
of live racing events, year on NASCAR
media coverage and Web merchandise
sites. • Second highest regular
• Go out of its way to show season sport on TV
the customer a good • NASCAR attracts over 250
time. big-name sponsors
• Create wholesome family-
oriented environment

1-3
 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
1-4
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 quality

1-5
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
Wants
Marketing offers:
 The form of needs as
including products,
shaped by culture and
services and
the individual
experiences
 Example: Want a Big
Value and satisfaction Mac
Exchange, transactions
Demands
and relationships
 Wants which are backed
Markets by buying power
1-6
Goal 2: Identify the five core marketplace concepts.
 Understanding the
Marketplace
Core Concepts Marketing offer
 Combination of
Needs, wants, and products, services,
demands information or
Marketing offers: experiences that
including products, satisfy a need or
services and want
experiences  Offer may include
Value and satisfaction services, activities,
Exchange, transactions people, places,
and relationships information or ideas
Markets
1-7
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 Satisfaction
experiences  A satisfied customer will
Value and satisfaction buy again and tell others
Exchange, transactions about their good
and relationships experience
Markets
1-8
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

1-9
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
1 - 10
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?

1 - 11
Goal 3: Identify elements of a customer-driven strategy.
Designing a customer driven markitng 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

1 - 12
Goal 3: Identify elements of a customer-driven strategy.
 Marketing Orientations
Marketing Management

Production concept Selling concept

Product concept Marketing concept

• Societal marketing concept

1 - 13
Goal 3: Identify elements of a customer-driven strategy.
 The Marketing Plan
Transforms the marketing strategy
into action
Includes the marketing mix and the
4P’s of marketing
 Product
 Price
 Place
 Promotion
1 - 14
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.

1 - 15
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.
1 - 16
Goal 4: Discuss CRM and capturing value.
 Not All Customers
are Equal
Basic Relationships
 Low-margin customers
Full Partnerships
 Key customers
Selective relationship management
 Weeding out unprofitable customers

1 - 17
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
1 - 18
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.
1 - 19
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
1 - 20
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
the Internet
relationships 1 - 21
Goal 5: Discuss trends and forces.
 Marketing Landscape
Challenges Geographical and
cultural distances
Digital age
have shrunk
Globalization  Greater market
Ethics and social coverage
 More options for
responsibility purchasing and
Not-for-profit manufacturing
marketing  Increased competition
from foreign
Marketing competitors
relationships 1 - 22
Goal 5: Discuss trends and forces.
 Marketing Landscape
Challenges Marketers need to
take great
Digital age
responsibility for the
Globalization
impact of their
Ethics and social actions
responsibility
Not-for-profit
marketing
Marketing
relationships 1 - 23
Goal 5: Discuss trends and forces.
 Marketing Landscape
Challenges Many organizations
are realizing the
Digital age
importance of
Globalization
strategic marketing
Ethics and social  Performing arts
responsibility  Government agencies
 Colleges
Not-for-profit  Hospitals
marketing  Churches
Marketing
relationships 1 - 24
Goal 5: Discuss trends and forces.
 Marketing Landscape
Challenges Profits through
managing long-term
Digital age
customer equity
Globalization  Improve customer
Ethics and social knowledge
 Target profitable
responsibility customers
Not-for-profit  Keep profitable
marketing customers

Marketing
relationships 1 - 25
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

1 - 26