Chapter One: Marketing - Managing Profitable Customer Relationshi
Roadmap: Previewing the Concepts
1. Define Marketing and the Marketing Process
2. Understand Importance of Customers and Core Marketplace Concepts
3. Customer-Driven Marketing Strategy and Marketing Management Orientations
4. Customer Relationship Management: Creating and Capturing Value
5. Major Trends and Forces Shaping the Marketing Landscape
What Is Marketing?
• Simple Definition: Marketing is the management of profitable customer relationships.
• Goals:
• Attract New Customers: By promising superior value.
• Retain and Grow Current Customers: Through delivering satisfaction.
Marketing Defined
• Concept: A social and managerial process for fulfilling individual and group needs and
wants.
• Old vs. New View of Marketing:
• Old View: Focused on "Making a Sale" - "Telling & Selling."
• New View: Emphasizes satisfying customer needs.
The Marketing Process
• Model of the Marketing Process:
1. Understand the Marketplace: Comprehend customer needs and wants.
2. Design a Customer-Driven Marketing Strategy
3. Construct a Superior Value Marketing Program
4. Build Profitable Relationships: Aim for customer delight.
5. Capture Value from Customers: To generate profits and sustain quality.
Needs, Wants, & Demands
• Needs: Essential states of deprivation including:
• Physical Needs: Food, clothing, shelter, safety.
• Social Needs: Belonging, affection.
• Individual Needs: Learning, knowledge, self-expression.
• Wants: Shaped by culture and personality.
• Formula: Wants + Buying Power = Demand
Need / Want Fulfillment
• Marketing Offer: Combines products, services, information, experiences to satisfy needs or
wants.
Need / Want Satisfiers
• Products: Include persons, places, organizations, information, and ideas.
• Services: Intangible offerings providing benefits without ownership.
• Brand Experiences: Aim to dazzle, touch, and stimulate senses, hearts, and minds.
Marketing Myopia
• Occurs when sellers focus more on product specifics than the benefits and experiences
provided.
• Leads to prioritizing "wants" over "needs."
Value & Satisfaction
• Setting expectations is crucial:
• Underperformance: Results in low satisfaction.
• Overperformance: Generates high satisfaction.
Exchange vs. Transaction
• Exchange: Obtaining a desired object by offering something in return.
• Transaction: The trade of values between two entities. Involves cash, credit, or check
exchanges.
What Is a Market?
• Defined as the set of actual and potential buyers sharing a need or want satisfied through
exchange relationships.
Modern Marketing Systems
• Includes:
• Suppliers
• Companies (Marketers)
• Competitors
• Marketing Intermediaries
• Final Users
Marketing Management
• The craft of selecting target markets and forging profitable relationships.
• Necessitates a deep understanding of consumer behavior and the marketplace.
Designing a Marketing Strategy
• Key Questions:
1. Target Market: Which customers do we serve?
2. Value Proposition: How do we best serve them?
Segmentation & Target Marketing
• Market Segmentation: Dividing the market into distinct customer segments.
• Target Marketing: Choosing which segment to serve.
Demand Management
• Objective: Increase, alter, or decrease demand as necessary.
• Demarketing: Reducing customer numbers or shifting demand patterns.
Value Proposition
• Defines the benefits and values a company delivers to fulfill customer needs.
• Determines brand positioning in the marketplace.
The Marketing Plan
• Translates marketing strategies into actionable plans using the 4 P's:
1. Product
2. Price
3. Place (Distribution)
4. Promotion
Customer Relationship Management (CRM)
• Essential processes centered on building and retaining profitable customer relations:
• Acquiring, keeping, and growing customers.
Customer Perceived Value
• Customer's evaluation of benefits versus costs in comparison to competitor offers.
Customer Satisfaction
• Dependent on perceived performance relative to expectations:
• High satisfaction often leads to loyalty.
• Some companies aim to delight customers by exceeding expectations.
Customer Relationships
• Built through loyalty and retention programs, offering:
• Financial Benefits: e.g., frequency marketing.
• Social Benefits: e.g., club marketing.
• Structural Ties
Marketing Management Philosophies
• Different Orientations:
• Production Concept
• Product Concept
• Selling Concept
• Marketing Concept
• Societal Marketing Concept
• Holistic Marketing Concept
Partner Relationship Marketing
• Collaborating with marketing partners:
• Internal Partners: Ensuring all employees are customer-focused.
• External Partners: Engaging in supply chain management and strategic alliances.
Customer Loyalty & Retention
• Customer Lifetime Value (CLV): Cumulative value of a customer's purchases over their
lifetime.
• Share of Customer: Percentage of customer's spending that a company captures.
Customer Equity
• The aggregation of customer lifetime values, essential for strategy based on loyalty and
potential profitability.
The New Digital Age
• Technology's Impact: Enhances firm-customer value delivery.
• Connectivity Revolution: Provides 24/7 access to information.
• Includes “Click-and-Mortar” and “Click-Only” models.
• Encourages B2B e-Commerce.
New Marketing Landscape
• Characterized by:
• Rapid Globalization
• Emphasis on Ethics and Social Responsibility
• Expansion of Not-for-Profit Marketing
• Evolvement of Marketing Relationships
