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MTS 312Principles of Marketing

Marketing: Managing ProfitableCustomer Relationships

Dr. Nattharika Rittippant

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What is Marketing?

• The process by which

companies:

 – Create value forcustomers

 – Build strongcustomer

relationships – To capture value from

customers in return

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Who’s the Boss?

“There is only one boss. The customer.And he can fire everybody in the companyfrom the chairman on down, simply by

spending his money somewhere else.”

Sam Walton

Wal-Mart Founder 

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Marketing Process

1. Understand the marketplace and customerwants and needs

2. Design a customer-driven marketing

strategy3. Construct a marketing plan that delivers

superior value

4. Build profitable relationships and create

customer satisfaction

5. Capture value from customers to createprofit and customer equity

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Customer Needs, Wants, and

Demands

• Needs:

 – States of deprivation

• Physical—food, clothing, warmth, safety

• Social—belonging and affection

• Individual—knowledge and self-expression

• Wants:

 – The form that needs take as they are shapedby culture and individual personality

• Demands:

 – Wants backed by buying power 

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Market Offerings

• Combination of products, services,

information, or experiences offered to a

market to satisfy a need or want

• Companies must avoid: – Marketing Myopia

• Focusing only on existing wants and

• Losing sight of underlying consumer needs

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Customer Value and Satisfaction

• Expectations

• Customers

• Value and satisfaction

• Marketers

• Set the right level of expectations

• Not too high or too low

• Choosing the value proposition:

 – The set of benefits or values a company

promises to deliver to customers to satisfy

their needs

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Marketing Management

• Marketing management:

 – The art and science of

choosing target markets

and building profitablerelationships with them

 – What customers will we

serve?

 – How can we best servethese customers?

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Selecting Customers to Serve

• Market segmentation:

 – Dividing the markets into segments of customers

•  Target marketing:

 – Which segments to go after 

• De-marketing:

 – Marketing to reduce demand temporarily or

permanently

 – The aim is not to destroy demand but to reduce orshift it

• Marketing management: – Customer management & Demand management

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Marketing Management Orientations

1. Production concept: – Consumers will favor products that are available or

highly affordable

2. Product concept: – Consumers will favor products that offer the mostquality, performance, and features

3. Selling concept:

 – Consumers will not buy enough of the firm’sproducts unless it undertakes a large scale sellingand promotion effort

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Marketing Management Orientations

4. Marketing concept’s key success factors:

 – Knowing needs & wants of the target markets

 – Delivering the desired satisfactions better

than competitors do

5. Societal concept: – Considering

• Consumers’ wants,• Company’s requirements,

• Consumers’ long-term interests

• Society’s long-run interests

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Marketing Mix

• The set of tools (four

Ps) the firm uses to

implement its

marketing strategy – Product

 – Price

 – Promotion

 – Place

Product Price

Place Promotion

4P’s

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Integrated Marketing Program

• A comprehensive plan that communicates

and delivers the intended value to chosen

customers

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Customer Relationship

Management (CRM)

• Exchange vs. Relationship

• CRM: – The overall process of building and maintaining

profitable customer relationships by deliveringsuperior value and satisfaction

• Customer perceived value – The difference between total customer value and total

customer cost

• Customer satisfaction – The extent to which a product’s perceived

performance matches a buyer’s expectations

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CRM: NASCAR Case

• Focus on creating customer relationshipsthrough: – Live racing events

• National tours around the US

• Parties, camp and cook out (fans bring their ownfood and beer)

• Meet the drivers and other enthusiasts

• Facilities include RV parks next to the race track

• Family-friendly with security guards

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CRM: NASCAR Case (cont’d)

• Focus on creating customer relationshipsthrough: – Media coverage

• TV coverage, in-car camera

• TV networks pay big money to broadcast NASCARevents

• Attracts several big sponsors for the events andthe cars

 – Great web sites (www.nascar.com)• Lots of information and entertainment

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Partner Relationship Management

• Working closely with partners to jointly bring

greater value to customers

 – Partners inside the company

• Electronically

• Cross-functional teams

 – Partners outside the company

• How marketers connect with their suppliers,channel partners, and competitors by

developing partnerships

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Capturing Value from Customers

• Creating Customer Loyalty and Retention

 – Customer lifetime value

• The value of the entire stream of purchases that

the customer would make over a lifetime ofpatronage

• Growing Share of Customer 

 – Share of customer

• The portion of the customer’s purchasing that a

company gets in its product categories

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Capturing Value from Customers

• Building Customer Equity

 – Customer equity• The total combined customer lifetime values of all

of the company’s customers – Building the right relationships with the

right customers• Involves treating customers as assets that need to

be managed and maximized

• Different types of customers require differentrelationship management strategies

• Build the right relationship with the rightcustomers

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The New Marketing Landscape

• Major Developments

 – Digital age

 – Globalization – Ethics and social responsibility

 – Not-for-profit marketing

• Museums

• Red Cross• Colleges

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The New Digital Age

• Major impact on the ways marketers connect

with and bring value to their customers

• Market research: Learning about & tracking

customers• Create new customized products

• Distribution

• Communication

• Video conferencing & Online data services

• Internet—creates marketplaces

 – For: Information; Entertainment; Communication

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Rapid Globalization

• The world is smaller 

• Think globally, act locally

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Ethics & Social Responsibility

• Marketers are being called upon to take

greater responsibility for the social andenvironmental impact of their actions in a

global economy• Social marketing campaigns

 – Encourage energy conservation and concern for

the environment or discourage smoking, excessive

drinking, and drug use