Marketing: Managing Marketing: Managing Profitable Customer Profitable Customer

RelationshipsRelationships

Chapter 1Chapter 1

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What is Marketing?

• Marketing is managing profitable Marketing is managing profitable customer relationshipscustomer relationships Attracting new customersAttracting new customers Retaining and growing current Retaining and growing current

customerscustomers

• ““Marketing” is NOT synonymous Marketing” is NOT synonymous with “sales” or “advertising”with “sales” or “advertising”

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What is Marketing?

•Kotler’s social definition:Kotler’s social definition: ““Marketing is a social and Marketing is a social and managerial process by which managerial process by which individuals and groups individuals and groups obtain what they need and obtain what they need and want through creating and want through creating and exchanging products and exchanging products and value with others.”value with others.”

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• GoodsGoods

• ServicesServices

• ExperiencesExperiences

• EventsEvents

• PersonsPersons

• PlacesPlaces

• PropertiesProperties

• OrganizationsOrganizations

• InformationInformation

• IdeasIdeas

Many Things Can Be Many Things Can Be Marketed!Marketed!

What is Marketing?

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• Needs, wants, Needs, wants, and demandsand demands

• Marketing Marketing offers: including offers: including products, products, services and services and experiencesexperiences

• Value and Value and satisfaction satisfaction

• Exchange, Exchange, transactions transactions and and relationshipsrelationships

• MarketsMarkets

Core Marketing ConceptsCore Marketing Concepts

What is Marketing?

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Marketing Management

• Marketing managementMarketing management is is “the art and science of “the art and science of choosing target markets and choosing target markets and building profitable building profitable relationships with them.”relationships with them.” Creating, delivering and Creating, delivering and

communicating superior communicating superior customer value is key.customer value is key.

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Marketing Management

• Customer Management:Customer Management: Marketers select customers Marketers select customers

that can be served well and that can be served well and profitably.profitably.

• Demand Management:Demand Management: Marketers must deal with Marketers must deal with

different demand states different demand states ranging from no demand to ranging from no demand to too much demand.too much demand.

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Marketing Management

• Production Production conceptconcept

• Product Product conceptconcept

• Selling Selling conceptconcept

• Marketing Marketing conceptconcept• Societal marketing conceptSocietal marketing concept

Management OrientationsManagement Orientations

Marketing Management

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CRM

•CRMCRM – – Customer Customer relationship managementrelationship management . . .. . .“is the overall process of “is the overall process of building and maintaining building and maintaining profitable customer relationships profitable customer relationships by delivering superior customer by delivering superior customer value and satisfaction.”value and satisfaction.”

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CRM• It costs 5 to 10 times MORE It costs 5 to 10 times MORE

to attract a new customer to attract a new customer than it does to keep a than it does to keep a current customer satisfied.current customer satisfied.

•Marketers must be Marketers must be concerned with the lifetime concerned with the lifetime value of the customer.value of the customer.

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CRM

• Attracting, Attracting, retaining and retaining and growing growing customerscustomers

• Building customer Building customer relationships and relationships and customer equitycustomer equity

• Customer value/satisfactionCustomer value/satisfaction Perceptions are keyPerceptions are key Meeting/exceeding Meeting/exceeding

expectations creates expectations creates satisfactionsatisfaction

• Loyalty and retentionLoyalty and retention Benefits of loyalty Benefits of loyalty Loyalty increases as Loyalty increases as

satisfaction levels increasesatisfaction levels increase Delighting consumers Delighting consumers

should be the goalshould be the goal

• Growing share of customerGrowing share of customer Cross-sellingCross-selling

Key ConceptsKey Concepts

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CRM• Customer equityCustomer equity

The total combined The total combined customer lifetime customer lifetime values of all values of all customers.customers.

Measures a firm’s Measures a firm’s performance, but performance, but in a manner that in a manner that looks to the future.looks to the future.

Key ConceptsKey Concepts

• Attracting, Attracting, retaining and retaining and growing growing customerscustomers

• Building customer Building customer relationships and relationships and customer equitycustomer equity

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CRM• Customer relationship Customer relationship

levels and toolslevels and tools Target market Target market

typically dictates type typically dictates type of relationshipof relationship

Basic relationshipsBasic relationships Full relationshipsFull relationships

Customer loyalty and Customer loyalty and retention programsretention programs

Adding financial Adding financial benefitsbenefits

Adding social benefitsAdding social benefits Adding structural tiesAdding structural ties

• Attracting, Attracting, retaining and retaining and growing growing customerscustomers

• Building customer Building customer relationships and relationships and customer equitycustomer equity

Key ConceptsKey Concepts

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Marketing Challenges

• Technological advances, rapid Technological advances, rapid globalization, and continuing globalization, and continuing social and economic shifts are social and economic shifts are causing marketplace changes.causing marketplace changes.

• Major marketing developments Major marketing developments can be grouped under the can be grouped under the theme of theme of ConnectingConnecting..

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Marketing Challenges

• Via technologyVia technology

• With With customerscustomers

• With marketing With marketing partnerspartners

• With the worldWith the world

• Advances in computers, Advances in computers, telecommunications, telecommunications, video-conferencing, etc. video-conferencing, etc. are major forces.are major forces. Databases allow for Databases allow for

customization of customization of products, messages products, messages and analysis of needs.and analysis of needs.

• The InternetThe Internet Facilitates anytime, Facilitates anytime,

anywhere connectionsanywhere connections Facilitates CRMFacilitates CRM Creates marketspacesCreates marketspaces

ConnectingConnecting

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Marketing Challenges• Selective relationship Selective relationship

management is key.management is key. Customer profitability Customer profitability

analysis separates analysis separates winners from losers.winners from losers.

• Growing “share of Growing “share of customer” customer” Cross-selling and up-Cross-selling and up-

selling are helpful.selling are helpful.

• Direct sales to Direct sales to buyers are growing.buyers are growing.

ConnectingConnecting

• Via technologyVia technology

• With With customerscustomers

• With marketing With marketing partnerspartners

• With the worldWith the world

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Marketing Challenges• Partner relationship Partner relationship

management management involves:involves: Connecting inside Connecting inside

the companythe company Connecting with Connecting with

outside partnersoutside partnersSupply chain Supply chain

managementmanagementStrategic alliancesStrategic alliances

ConnectingConnecting

• Via technologyVia technology

• With With customerscustomers

• With marketing With marketing partnerspartners

• With the worldWith the world

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Marketing Challenges• GlobalizationGlobalization

CompetitionCompetition New opportunitiesNew opportunities

• Greater concern for Greater concern for environmental and environmental and social responsibilitysocial responsibility

• Increased marketing Increased marketing by nonprofit and by nonprofit and public-sector entitiespublic-sector entities Social marketing Social marketing

campaignscampaigns

ConnectingConnecting

• Via technologyVia technology

• With With customerscustomers

• With marketing With marketing partnerspartners

• With the worldWith the world