MTS 312

Principles of Marketing

Marketing: Managing Profitable

Customer Relationships
Dr. Nattharika Rittippant

What is Marketing?

The process by which

companies:

Create value for

customers
Build strong
customer
relationships
To capture value from
customers in return

Whos the Boss?

There is only one boss. The customer.
And he can fire everybody in the company
from the chairman on down, simply by
spending his money somewhere else.
Sam Walton
Wal-Mart Founder

Marketing Process
1. Understand the marketplace and customer
wants and needs
2. Design a customer-driven marketing
strategy
3. Construct a marketing plan that delivers
superior value
4. Build profitable relationships and create
customer satisfaction
5. Capture value from customers to create
profit and customer equity

Customer Needs, Wants, and

Demands
Needs:
States of deprivation
Physicalfood, clothing, warmth, safety
Socialbelonging and affection
Individualknowledge and self-expression

Wants:
The form that needs take as they are shaped
by culture and individual personality

Demands:
Wants backed by buying power

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

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

Marketplace
Markets
The set of actual and potential buyers of a product

Marketing system
All of the actors (suppliers, company, competitors,
intermediaries, and end users) in the system who are
affected by major environmental forces

Demographic
Economic
Physical
Technological
Politicallegal
Socio-cultural

Marketing Management
Marketing management:
The art and science of
choosing target markets
and building profitable
relationships with them
What customers will we
serve?
How can we best serve
these customers?

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 or
shift it

Marketing management:
Customer management & Demand management

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 most
quality, performance, and features

3. Selling concept:
Consumers will not buy enough of the firms
products unless it undertakes a large scale selling
and promotion effort

Marketing Management Orientations

4. Marketing concepts key success factors:
Knowing needs & wants of the target markets
Delivering the desired satisfactions better
than competitors do

5. Societal concept:
Considering
Consumers wants,
Companys requirements,
Consumers long-term interests
Societys long-run interests

Marketing Mix
The set of tools (four
Ps) the firm uses to
implement its
marketing strategy
Product
Price
Promotion
Place

Product

Price

4Ps

Place

Promotion

Integrated Marketing Program

A comprehensive plan that communicates
and delivers the intended value to chosen
customers

Customer Relationship
Management (CRM)
Exchange vs. Relationship
CRM:
The overall process of building and maintaining
profitable customer relationships by delivering
superior value and satisfaction

Customer perceived value

The difference between total customer value and total
customer cost

Customer satisfaction
The extent to which a products perceived
performance matches a buyers expectations

CRM: NASCAR Case

Focus on creating customer relationships
through:
Live racing events
National tours around the US
Parties, camp and cook out (fans bring their own
food and beer)
Meet the drivers and other enthusiasts
Facilities include RV parks next to the race track
Family-friendly with security guards

CRM: NASCAR Case (contd)

Focus on creating customer relationships
through:
Media coverage
TV coverage, in-car camera
TV networks pay big money to broadcast NASCAR
events
Attracts several big sponsors for the events and
the cars
Great web sites (www.nascar.com)
Lots of information and entertainment

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

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 of
patronage

Growing Share of Customer

Share of customer
The portion of the customers purchasing that a
company gets in its product categories

Capturing Value from Customers

Building Customer Equity
Customer equity
The total combined customer lifetime values of all
of the companys 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 different
relationship management strategies
Build the right relationship with the right
customers

The New Marketing Landscape

Major Developments
Digital age
Globalization
Ethics and social responsibility
Not-for-profit marketing
Museums
Red Cross
Colleges

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

Internetcreates marketplaces
For: Information; Entertainment; Communication

Rapid Globalization
The world is smaller
Think globally, act locally

Ethics & Social Responsibility

Marketers are being called upon to take
greater responsibility for the social and
environmental 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