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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