Chapter 1 - Marketing: Managing Profitable Customer Relationships

Chapter 1 - Marketing: Managing Profitable Customer Relationships

Chapter1 Marketing: Managing Profitable Customer Relationships Copyright 2008 Pearson Education Canada Principles of Marketing, Seventh Canadian Editio Learning Goals 1. 2. 3. 4. 5. Define marketing and outline the marketing process. Explain the importance of understanding customers and the marketplace, and identify the five core marketplace concepts Identify the key elements of a customer-driven marketing strategy and discuss the marketing

management orientations. Discuss customer relationship management and identify strategies for creating and capturing value from customers. Describe the major trends and forces changing the marketing landscape. Copyright 2008 Pearson Education Canada 1-2 Principles of Marketing, Seventh Canadian Editio NASCAR What is their secret? NASCAR is the #1 televised motorsport in Canada Compelling blend of live racing events, media coverage and Web sites Show the customer a good time

To develop customer relationship NASCAR creates a wholesome family-oriented environment. Copyright 2008 Pearson Education Canada Fans are passionate about NASCAR Fans spend nearly $700 a year on NASCAR merchandise Second highest regular season sport on TV NASCAR attracts over 250 big-name sponsors Big part of the NASCA experience is the feeling of accessibility 1-3 Principles of Marketing, Seventh Canadian Editio

Learning Goals 1. 2. 3. 4. 5. Define marketing and outline the marketing process. Explain the importance of understanding customers and the marketplace, and identify the five core marketplace concepts Identify the key elements of a customer-driven marketing strategy and discuss the marketing management orientations. Discuss customer relationship management and identify strategies for creating and capturing value from customers. Describe the major trends and forces changing the marketing landscape. Copyright 2008 Pearson Education Canada

1-4 Principles of Marketing, Seventh Canadian Editio What is Marketing? Marketing is about managing profitable customer relationships Attracting new customers Retaining and growing current customers 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 Copyright 2008 Pearson Education Canada 1-5 Principles of Marketing, Seventh Canadian Editio Learning Goals 1.

2. 3. 4. 5. Define marketing and outline the marketing process. Explain the importance of understanding customers and the marketplace, and identify the five core marketplace concepts Identify the key elements of a customer-driven marketing strategy and discuss the marketing management orientations. Discuss customer relationship management and identify strategies for creating and capturing value from customers. Describe the major trends and forces changing the marketing landscape. Copyright 2008 Pearson Education Canada 1-6 Principles of Marketing, Seventh Canadian Editio

Understanding the Marketplace Need Core Concepts Understand the marketplace and customer wants and needs Design a customer-driven marketing strategy Construct a marketing program that delivers superior value Build profitable relationships and create customer delight Capture value from customers to create profits and customer quality Copyright 2008 Pearson Education Canada State of felt deprivation

Wants The form of needs as shaped by culture and the individual Demands Wants which are backed by buying power 1-7 Principles of Marketing, Seventh Canadian Editio Understanding the Marketplace Marketing offer Core Concepts Understand the marketplace and customer wants and needs (cont.) Design a customer-driven marketing strategy

Construct a marketing program that delivers superior value Build profitable relationships and create customer delight Capture value from customers to create profits and customer quality Copyright 2008 Pearson Education Canada Combination of products, services, information or experiences that satisfy a need or want Offer may include services, activities, people, places, information or ideas

1-8 Principles of Marketing, Seventh Canadian Editio Understanding the Marketplace Core Concepts Value Understand the marketplace and customer wants and needs (cont.) Design a customer-driven marketing strategy Construct a marketing program that delivers superior value Build profitable relationships and create customer delight Capture value from customers to create

profits and customer quality Copyright 2008 Pearson Education Canada Customers form expectations regarding value Marketers must deliver value to consumers Satisfaction A satisfied customer will buy again and tell others about their good experience 1-9 Principles of Marketing, Seventh Canadian Editio Discussion Questions Customer Satisfaction When have you,

personally, been extremely satisfied or dissatisfied with a product? Why? Why is it so difficult for companies to deliver value to consumers? Copyright 2008 Pearson Education Canada ? 1-10 Principles of Marketing, Seventh Canadian Editio Understanding the Marketplace Exchange Core Concepts Understand the marketplace and customer wants and needs (cont.)

Design a customer-driven marketing strategy Construct a marketing program that delivers superior value Build profitable relationships and create customer delight Capture value from customers to create profits and customer quality Copyright 2008 Pearson Education Canada 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 1-11 Principles of Marketing, Seventh Canadian Editio Understanding the Marketplace Core Concepts Market Understand the marketplace and customer wants and needs (cont.) Design a customer-driven marketing strategy Construct a marketing program that delivers superior value Build profitable relationships and create customer delight Capture value from

customers to create profits and customer quality Copyright 2008 Pearson Education Canada Set of actual and potential buyers of a product Marketers seek buyers that are profitable 1-12 Principles of Marketing, Seventh Canadian Editio Learning Goals 1. 2. 3. 4. 5. Define marketing and outline the marketing

process. Explain the importance of understanding customers and the marketplace, and identify the five core marketplace concepts Identify the key elements of a customer-driven marketing strategy and discuss the marketing management orientations. Discuss customer relationship management and identify strategies for creating and capturing value from customers. Describe the major trends and forces changing the marketing landscape. Copyright 2008 Pearson Education Canada 1-13 Principles of Marketing, Seventh Canadian Editio Designing a Customer-Driven Marketing Strategy Marketing management is the art and science of choosing target markets and building profitable

relationships with them. A winning marketing strategy What customers will we serve? How can we serve these customers best? Copyright 2008 Pearson Education Canada 1-14 Principles of Marketing, Seventh Canadian Editio Designing a CustomerDriven Marketing Strategy What customers will we serve? Market segmentation and target marketing Marketers select customers that can be served profitably Known as customer management and demand management How can we serve these customers best? By defining a value proposition that will differentiate and position the brand in the marketplace Is set of benefits or values a company promises to

deliver to consumers in order to satisfy their needs Copyright 2008 Pearson Education Canada 1-15 Principles of Marketing, Seventh Canadian Editio Netflix DVDs by mail Netflix began in early 2000 DVDs are delivered to your home with return mail envelope Monthly charge with unlimited rentals limited amount out at one time Copyright 2008 Pearson Education Canada 1-16 Principles of Marketing, Seventh Canadian Editio Discussion Questions Netflix 1. How might Netflix

define its target market? 2. What need or want does it fulfill? 3. What is its marketing offer? 4. What is its value proposition? Is it a strong value proposition for its target market? Copyright 2008 Pearson Education Canada ? 1-17 Principles of Marketing, Seventh Canadian Editio Marketing Management Orientations The Production Concept Consumers will favour products that are available and highly affordable

The Product Concept Consumers will favour products that offer the most in quality, performance, and innovative features Copyright 2008 Pearson Education Canada 1-18 Principles of Marketing, Seventh Canadian Editio Marketing Management Orientations The Selling Concept Consumers will not buy enough of the firms products unless it undertakes a large-scale selling effort. The Marketing Concept Achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do.

Copyright 2008 Pearson Education Canada 1-19 Principles of Marketing, Seventh Canadian Editio Marketing Management Orientations The Societal Marketing Concept The marketing strategy should deliver value to customers and other stakeholders affected by marketing decisions in a way that maintains or improves the consumers and the societys well-being. Copyright 2008 Pearson Education Canada 1-20 Principles of Marketing, Seventh Canadian Editio Preparing a Marketing Plan

and Program Build customer relationships by transforming the marketing strategy into action Includes the marketing mix and the 4Ps of marketing Product Price Place Promotion Copyright 2008 Pearson Education Canada 1-21 Principles of Marketing, Seventh Canadian Editio Learning Goals 1.

2. 3. 4. 5. Define marketing and outline the marketing process. Explain the importance of understanding customers and the marketplace, and identify the five core marketplace concepts Identify the key elements of a customer-driven marketing strategy and discuss the marketing management orientations. Discuss customer relationship management and identify strategies for creating and capturing value from customers. Describe the major trends and forces changing the marketing landscape. Copyright 2008 Pearson Education Canada 1-22 Principles of Marketing, Seventh Canadian Editio

Building Customer Relationships CRM Customer relationship management . . . is 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. Copyright 2008 Pearson Education Canada 1-23 Principles of Marketing, Seventh Canadian Editio Relationship Building Blocks: Value and Satisfaction Customer Perceived Value The customers evaluation of the difference between benefits and costs. Customers often do not judge values

and costs accurately or objectively. Customer Satisfaction Products perceived performance relative to customers expectations. Copyright 2008 Pearson Education Canada 1-24 Principles of Marketing, Seventh Canadian Editio Customer Relationship Levels and Tools Basic relationships low margin customers Full partnerships key customers Frequency marketing programs Reward customers who buy frequently or in large amounts

Club marketing programs Offer members special discounts and create member communities Copyright 2008 Pearson Education Canada 1-25 Principles of Marketing, Seventh Canadian Editio The Changing Nature of Customer Relationships Relating with more Carefully Selected Customers Relating for the Long-Term Relating Directly Copyright 2008 Pearson Education Canada 1-26 Principles of Marketing, Seventh Canadian Editio Partnership Relationship

Management Working closely with partners in other company departments and outside the company to jointly bring greater value to customers Partners Inside the Company Partners Outside the Firm Strategic partners Supply chain management Copyright 2008 Pearson Education Canada 1-27 Principles of Marketing, Seventh Canadian Editio Capturing Value from Customers Creating Customer Loyalty and Retention Customer delight leads to emotional relationships and loyalty Customer lifetime value shows true worth of a customer

Growing Share of Customer Share of customers purchase in a product category Achieved through offering greater variety, cross-sell and up-sell strategies Copyright 2008 Pearson Education Canada 1-28 Principles of Marketing, Seventh Canadian Editio Capturing Value from Customers Building Customer Equity The combined customer lifetime values of all current and potential customers Measures a firms performance, but in a manner that looks to the future Choosing the best customers is key Copyright 2008 Pearson Education Canada 1-29

Principles of Marketing, Seventh Canadian Editio Capturing Value from Customers The company can classify customers according to their potential profitability and manage its relationships accordingly. Copyright 2008 Pearson Education Canada 1-30 Principles of Marketing, Seventh Canadian Editio Learning Goals 1. 2. 3. 4. 5. Define marketing and outline the marketing process.

Explain the importance of understanding customers and the marketplace, and identify the five core marketplace concepts Identify the key elements of a customer-driven marketing strategy and discuss the marketing management orientations. Discuss customer relationship management and identify strategies for creating and capturing value from customers. Describe the major trends and forces changing the marketing landscape. Copyright 2008 Pearson Education Canada 1-31 Principles of Marketing, Seventh Canadian Editio The New Marketing Landscape Challenges Advances in computers,

telecommunication s information, transportation The Digital Age Rapid Globalization Ethics and Social responsibility Not-for-profit Marketing Copyright 2008 Pearson Education Canada Customer research and tracking Product development Distribution New advertising tools 24/7 marketing through the Internet 1-32 Principles of Marketing, Seventh Canadian Editio

The New Marketing Landscape Challenges Geographical and cultural distances have shrunk The Digital Age Rapid Globalization Ethics and Social responsibility Not-for-profit Marketing Copyright 2008 Pearson Education Canada Greater market coverage More options for purchasing and manufacturing Increased competition from

foreign competitors 1-33 Principles of Marketing, Seventh Canadian Editio The New Marketing Landscape Challenges Marketers need to take great responsibility for the impact of their actions The Digital Age Rapid Globalization Ethics and Social responsibility Not-for-profit Marketing Copyright 2008 Pearson Education Canada

Caring capitalism is a way to differentiate your company 1-34 Principles of Marketing, Seventh Canadian Editio The New Marketing Landscape Challenges Many non-profit organizations are realizing the importance of strategic marketing The Digital Age Rapid Globalization Ethics and Social responsibility Not-for-profit

Marketing Copyright 2008 Pearson Education Canada 1-35 Performing arts Government agencies Colleges Hospitals Churches Principles of Marketing, Seventh Canadian Editio What is Marketing? The process of building profitable customer relationships by creating value for customers and capturing

value in return Copyright 2008 Pearson Education Canada 1-36 Principles of Marketing, Seventh Canadian Editio Learning Goals 1. 2. 3. 4. 5. Define marketing and outline the marketing process. Explain the importance of understanding customers and the marketplace, and identify the five core marketplace concepts Identify the key elements of a customer-driven marketing strategy and discuss the marketing management orientations. Discuss customer relationship management and

identify strategies for creating and capturing value from customers. Describe the major trends and forces changing the marketing landscape. Copyright 2008 Pearson Education Canada 1-37 Principles of Marketing, Seventh Canadian Editio

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