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Marketing:

Managing Profitable Customer Relationships

1 © 2012 Principles of Marketing: An Asian Perspective


1.1
What is Marketing?

2 © 2012 Principles of Marketing: An Asian Perspective


1.1 What is Marketing?

Marketing is all around


you…
Even in markets such as this in
Vietnam, marketing is at work.
The fruit seller has to
understand her market,
distribute her fruits at the right
place, sell them at the right
price, and be alert of who else
are selling fruits or possible
substitutes. She has to make
sure that she offers superior
customer value.

3 © 2012 Principles of Marketing: An Asian Perspective


What is Marketing?

Marketing is about
delivering superior
value…

Nintendo’s Wii surged ahead of competition by delivering superior


value and customer satisfaction with its interactive games.

4 © 2012 Principles of Marketing: An Asian Perspective


Agenda

1. What is Marketing?(quick review)


2. The Marketing Process
Understand the marketplace and customer needs and wants.
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.

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1.1 What is Marketing?

The Five Steps in the Marketing Process


In the marketing process, companies work to understand consumers,
create customer value, and build strong customer relationships.
The steps are:
1.Understand the marketplace and customer needs and wants.
2.Design a customer-driven marketing strategy.
3.Construct a marketing program that delivers superior value.
4.Build profitable relationships and create customer delight.
5.Capture value from customers to create profits and customer quality.
In the final step, companies reap the rewards of capturing value from
consumers in the form of sales, profits, and long-term customer equity.

6 © 2012 Principles of Marketing: An Asian Perspective


1.1 What is Marketing?

7 © 2012 Principles of Marketing: An Asian Perspective


STEP 1: UNDERSTAND MARKET PLACE/cUSTOMERS

Salient problem facing many parents and students

There are more than 100 HEI (Higher Education


Institutions) in Cambodia producing tens of thousands
of business graduates every year.

Yet, employers still complain that they cannot find


enough graduates who have the analytical, problem-
solving and communication skills they need.

The degrees awarded are not recognized abroad and


not considered to be of an international standard.
Validating that the problem is worth solving

Is there an opportunity in the market for an


HEI/program that can maximize your chances of
getting a job and that is recognized, ideally, all over
the world?
A program of study that is respected and valued by
employers inside and outside of Cambodia.
THREE QUESTIONS WHICH WE SHOULD ALL ASK:
1)Is there demand for this product/service/business?
2)Can we make money sooner or later?
3)Do we have the capacity & resources to launch and
sustain?
On a Scale of 0-10, how important are
these attributes to you?

0= Of No Importance at all

10= Of Utmost Importance

However, only need to do it within the


target segment!!!
IMPORTANCE
According to Lower Upper
Segment Middle Income

Income Income
Attribute 0-10 0-10 0-10

“Quality” 10 9 8

Cost 10 7 3

Placement 10 6 3

Coolness 3 8 10
On a Scale of 0-10, rate those HEIs on the attributes
provided.

0= Absolute Rubbish

10 = Truly Outstanding, More or less Perfect


Perceived Opportunity
Delivery for
HEI
X Y
 CamEd
Attribute 0-10 0-10 0-10

Quality 2 4 >7

Cost 8 7 >3

Placement 2 4 >7

Coolness 2 5 >7
Concen
Y= trate
Impor X y(qua Keep up the Good
tance (qual) Here l) Work
y
x (Cool OPPORT
(Coolness) ness) UNITY
TO
POSITION
y IN Q2
X (Place BUT THIS
(Placement) ment) COSTS $$$

(UNPLANNE
High D)
OPPORTUN
ITY TO
ELEVATE
LATENT
Perceived X CamEd
Delivery But most
importantly
Target
HEI
Across
In Target Y Segment=
Segment
Segments ?

Attribute 0-10 0-10 0-10


Quality 2 4 8

Cost 8 7 3

Placement 2 4 8

Coolness 2 4 9
Step 2: MARKETING STRATEGY: Segmentation,
Targeting, Positioning

CamEd ’S BRAND POSITIONING STATEMENT FOR BA PROGRAM


To Bac II graduates in Phnom Penh who wish to gain two
qualifications, including that of an internationally accredited and
recognised Certified Accounting Technician, CamEd Business School is
an American-owned and operated Higher Education Institution that
builds on a proven 15+year track record of excellence in teaching and
student services to imbue students with the Skills and Knowledge
required by multinational companies in and outside of Cambodia.

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Step 3: Marketing Program
HOW TO DELIVER “QUALITY”
HIGHLY QUALIFIED & EXPERIENCED (AND EXPENSIVE ! )
LECTURERS

TOTAL COMMITMENT TO TEACHING QUALITY & OUTCOMES


(STUDENT SATISFACTION & STUDENT RESULTS IN EXTERNAL
ACCA UK EXAMS)

EMPHASIS ON STUDENT EXPERIENCE (TECHNICAL & SOFT


SKILLS)

STATE-OF-THE ART CLASSROOMS

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Marketing Program

HOW TO DELIVER GOOD PLACEMENT RECORD


CAREERS OFFICE HEADED BY DIRECTOR WHO MAINTAINS
CLOSE RELATIONSHIPS WITH TOP EMPLOYERS

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Marketing Program

COOLNESS GREW NATURALLY AS CAMED BECAME “THE


COOL”BUSINESS SCHOOL (PARENTS HAPPY, THEIR CHILDREN ALSO
HAPPY).
VERY ACTIVE STUDENT SOCIAL, SPORTS LIFE, ETC IN SPITE OF
FAIRLY RIGOROUS ACADEMIC PROGRAM (ACCA!)

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Step 4: Build Profitable Relationships and create
customer delight

Mutually profitable relationships between consumers


(Students) and CamEd

Hopefully, consumer delight thanks to good student experience


and employment outcomes leading to word-of-mouth and
referrals

Mutually profitable relationships between customers


(Employers) and CamEd

Hopefully, customer delight thanks to satisfaction with grads


and leading to customer loyalty and word-of-mouth

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Who are these two people?
Step 5: Capture Customer Value
Among Columbia Business School’s prominent alumni are:

Warren Buffett, the second richest person in the world who


learned “value investing” at Columbia.

Henri Kravis, one of the first practitioners of Leveraged Buy-


out (LBO) on Wall Street, donated $100 million to Columbia.

One day, some CEOs’or successful entrepreneurs will be CamEd


BA graduates. Already, some executives did their ACCAs at
CamEd.

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Customer Lifetime Value (CLV) of alumni

These alumni and others


(maybe , Casey?) have
contributed close to $500
million to build a new campus
for Columbia Business School.

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What is Marketing?

Defining Marketing

Marketing is a process by
which companies create value
for customers and build strong
customer relationships to capture
value from customers in return.

25 © 2012 Principles of Marketing: An Asian Perspective


What is Marketing?

The Scope of Marketing


• Marketing is not restricted to profit-making organizations.
• Non-profits (colleges, hospitals, churches, etc.) must also perform
marketing.
• Marketing must both attract new customers and build relationships
with current customers.
• Most people think of marketing as selling and/or advertising.
• Its focus is really on satisfying customer needs.

26 © 2012 Principles of Marketing: An Asian Perspective


1) All of the following are accurate descriptions of modern
marketing EXCEPT which one?
A) Marketing is the creation of value for customers.
B) Marketing is managing profitable customer relationships.
C) Selling and advertising are synonymous with marketing.
D) Marketing involves satisfying customers' needs.
E) Marketing is used by for-profit and not-for-profit
organizations.

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Model of the Marketing process

28 © 2012 Principles of Marketing: An Asian Perspective


5) According to the simple five-step model of the marketing
process, a company needs to ________ before designing a
customer-driven marketing strategy.
A) determine how to deliver superior value
B) build profitable relationships with customers
C) use customer relationship management to create full
partnerships with key customers
D) understand the marketplace and customer needs and wants
E) construct key components of a marketing program

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13) Consumer research, product development,
communication, distribution, pricing, and service
are all core ________ activities.
A) exchange
B) marketing
C) management
D) production
E) customer relationship management

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1.2
Understanding the Marketplace and Customer Needs

31 © 2012 Principles of Marketing: An Asian Perspective


Needs Wants

Demands

32 © 2012 Principles of Marketing: An Asian Perspective


1.2 Understanding the Marketplace and Customer
Needs

Customer Needs, Wants and Demands

• States of deprivation

Needs •

Physical—food, clothing, warmth, safety
Social—belonging and affection
• Individual—knowledge and self-expression

Wants • Form that needs take as they are shaped by


culture and individual personality

Demands • Wants backed by buying power

33 © 2012 Principles of Marketing: An Asian Perspective


6) ________ are human needs as shaped by
individual personality and culture.
A) Needs
B) Wants
C) Demands
D) Values
E) Exchanges

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1.2 Understanding the Marketplace and Customer
Needs

Market Offerings

Market offerings are some combination of products, services,


information, or experiences offered to a market to satisfy a need or
want

35 © 2012 Principles of Marketing: An Asian Perspective


1.2 Understanding the Marketplace and Customer
Needs

Marketing offerings are not just limited to physical products…

The Banyan Tree Resorts provide a sanctuary for the senses to those
who want a peaceful respite from the hustle and bustle of city life.

36 © 2012 Principles of Marketing: An Asian Perspective


1.2 Understanding the Marketplace and Customer
Needs

Marketing myopia
What are we really selling- dog biscuits or more?

37 © 2012 Principles of Marketing: An Asian Perspective


1.2 Understanding the Marketplace and Customer
Needs

Marketing myopia

• The mistake of paying more attention to the specific products a


company offers than to the benefits and experiences derived from
these products.

• Companies must seek to avoid the marketing myopia trap!

38 © 2012 Principles of Marketing: An Asian Perspective


10) Many sellers make the mistake of paying more
attention to the specific products they offer than to the
benefits and experiences produced by these products.
These sellers suffer from ________.
A) selling myopia
B) marketing management
C) marketing myopia
D) value proposition
E) the product concept
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1.2 Understanding the Marketplace and Customer
Needs

Avoiding Marketing Myopia

Avoid marketing myopia by focusing on product benefits and customer


needs.

40 © 2012 Principles of Marketing: An Asian Perspective


1.2 Understanding the Marketplace and Customer
Needs

Customer Value and Expectations

• Consumers usually face a wide variety of products and services that


might satisfy a given need.

• How do they choose among these market offerings?

• Customers form expectations about the value and satisfaction that


various market offerings will deliver and buy accordingly.

• Satisfied customers buy again and tell others about their good
experiences; while dissatisfied customers often switch to competitors
and complain about the product to others.

41 © 2012 Principles of Marketing: An Asian Perspective


1.2 Understanding the Marketplace and Customer
Needs

Creating the balance between customer expectations and the


marketers ability to deliver on value

Customers
• Value and
satisfaction

Marketers
• Set the right level
of expectations
• Not too high or low

42 © 2012 Principles of Marketing: An Asian Perspective


1.2 Understanding the Marketplace and Customer
Needs

The Case Study of Sony Pictures: Crouching Tiger, Hidden


Dragon Movie Sony Pictures – With a very limited marketing budget in the
U.S., Sony Pictures relied on word-of-mouth communications to
promote its Chinese sword-fighting film, Crouching Tiger, Hidden
Dragon. It limited the distribution of the film to only a handful of
cinemas to generate intense interest that would
spread by word of mouth. Further, over 95 percent of the
U.S.’s top critics loved the film despite it being subtitled.
This resulted in more people wanting to see the film than
there were screens showing it. As word got around, Sony
increased the number of screens showing it from 20 to 75,
then 120, then 160 and so on, to over 2,000 screens at its
peak. People who loved the film told others about it, who
could not get tickets because the cinemas were sold out,
which heightened the desire, which in turn, fuelled more
word of mouth. This resulted in the film staying in the top
10 box-office chart in the U.S. for months, relying mainly
on word of mouth.

43 © 2012 Principles of Marketing: An Asian Perspective


1.2 Understanding the Marketplace and Customer
Needs

Marketing and Exchange

Exchange is the act of


obtaining a desired object
from someone by offering
something in return

44 © 2012 Principles of Marketing: An Asian Perspective


1.2 Understanding the Marketplace and Customer
Needs

Exchange

Example
Car: Consumers exchange money and a trade-in vehicle for a new car
Politicians: Consumers exchange their vote for a promise of policies if
elected.

45 © 2012 Principles of Marketing: An Asian Perspective


1.2 Understanding the Marketplace and Customer
Needs

Marketing involves building relationships

• Marketing consists of actions taken to build and maintain desirable


exchange relationships with target audiences involving a product,
service, idea, or other object.

• Beyond simply attracting new customers and creating transactions,


the goal is to retain customers and grow their business with the
company.

• Marketers want to build strong relationships by consistently


delivering superior customer value.

46 © 2012 Principles of Marketing: An Asian Perspective


1.2 Understanding the Marketplace and Customer
Needs

Markets

A market is the set of actual and potential buyers of a product.

47 © 2012 Principles of Marketing: An Asian Perspective


1.2 Understanding the Marketplace and Customer
Needs

Elements of modern marketing system

The different parties who are involved in the marketing process

48 © 2012 Principles of Marketing: An Asian Perspective


1.3
Designing a Customer-Driven Marketing Strategy

49 © 2012 Principles of Marketing: An Asian Perspective


1.3 Designing a Customer-Driven Marketing Strategy

Marketing Management

Marketing management
is defined as the art and
science of choosing target
markets and building
profitable relationships
with them.

50 © 2012 Principles of Marketing: An Asian Perspective


1.3 Designing a Customer-Driven Marketing Strategy

Marketing Management

Two key questions to determine how to design a winning marketing


strategy:

- What customers will we serve?


- How can we best serve these customers?

51 © 2012 Principles of Marketing: An Asian Perspective


1.3 Designing a Customer-Driven Marketing Strategy

Selecting Customers to Serve

Market segmentation refers to dividing the markets into segments


of customers

Target marketing refers to which segments to go after

52 © 2012 Principles of Marketing: An Asian Perspective


1.3 Designing a Customer-Driven Marketing Strategy

Target Marketing

Target market – The Mandarin Oriental


Hotel goes after the affluent
professionals and business market.

53 © 2012 Principles of Marketing: An Asian Perspective


1.3 Designing a Customer-Driven Marketing Strategy

Value Proposition

What is a Value Proposition?

54 © 2012 Principles of Marketing: An Asian Perspective


1.3 Designing a Customer-Driven Marketing Strategy

Value proposition

Set of benefits or values a


company promises to deliver
to customers to satisfy their needs

55 © 2012 Principles of Marketing: An Asian Perspective


1.3 Designing a Customer-Driven Marketing Strategy

Value proposition

Red Bull energy drink vitalizes both


body and mind. It gives you “wiiings.”

56 © 2012 Principles of Marketing: An Asian Perspective


14) The art and science of choosing target markets
and building profitable relationships with them is
called ________.
A) marketing management
B) positioning
C) segmentation
D) selling
E) differentiation

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15) Selecting which segments of a population
of customers to serve is called ________.
A) market segmentation
B) positioning
C) customization
D) target marketing
E) managing the marketing effort

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16) Which of the following is the set of benefits a
company promises to deliver to customers to satisfy
their needs?
A) a money-back guarantee
B) low pricing
C) customer service
D) a value proposition
E) an attribute

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17) Which customer question is answered by a company's
value proposition?
A) "Why should I buy your brand rather than a
competitor's?"
B) "How does your brand benefit society?"
C) "What are the costs and benefits of your brand?"
D) "What kind of experience will I have with products and
services associated with this brand?"
E) "What are the benefits of being a loyal consumer of your
brand?"

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1.3 Designing a Customer-Driven Marketing Strategy

Marketing Management orientations

Over time five alternative concepts have developed under which


organizations design and carry out their marketing strategies.

61 © 2012 Principles of Marketing: An Asian Perspective


1.3 Designing a Customer-Driven Marketing Strategy

Production Concept

Consumers will favor products that are available and affordable.

Management should focus on improving production and distribution


efficiency.

62 © 2012 Principles of Marketing: An Asian Perspective


1.3 Designing a Customer-Driven Marketing Strategy

Production Concept

Consumers will favor products that offer the most in quality,


performance, and innovative features

Organization should therefore devote its


energy to making continuous product
improvements.

63 © 2012 Principles of Marketing: An Asian Perspective


1.3 Designing a Customer-Driven Marketing Strategy
The problem with the Product Concept

• Product quality and improvement are important parts of most


marketing strategies. However, focusing only on the company’s
products can also lead to marketing myopia.
• For example, some manufacturers believe that if they can “build a
better mousetrap, the world will beat a path to their door.”

64 © 2012 Principles of Marketing: An Asian Perspective


1.3 Designing a Customer-Driven Marketing Strategy
The problem with the Product Concept

• But buyers may well be looking for a better solution to a mouse


problem, not necessarily for a better mousetrap.
• The better solution might be an exterminating service or something
that works better than a mousetrap.
• Further, a better mousetrap will not sell unless the manufacturer
designs, packages, and prices it attractively, places it in convenient
distribution channels, brings it to the attention of people who need
it, and convinces buyers that it is a better product.

65 © 2012 Principles of Marketing: An Asian Perspective


1.3 Designing a Customer-Driven Marketing Strategy

Selling Concept

Consumers will not buy enough


without a large scale selling and
promotion effort

66 © 2012 Principles of Marketing: An Asian Perspective


1.3 Designing a Customer-Driven Marketing Strategy

Selling Concept

• The concept is typically practiced with unsought goods—those that


buyers do not normally think of buying, such as insurance or blood
donations.
• These industries must be good at tracking down prospects and
selling them on product benefits.

67 © 2012 Principles of Marketing: An Asian Perspective


1.3 Designing a Customer-Driven Marketing Strategy

Marketing Concept

• Under the marketing concept, customer focus and value are the
paths to sales and profits.
• The job is not to find the right customers for your product but to find
the right products for your customers.
• Customer-driven marketing is about understanding customer needs
and creating products and services that meet existing and latent
needs.
• And delivering the desired satisfactions better than competitors do

68 © 2012 Principles of Marketing: An Asian Perspective


1.3 Designing a Customer-Driven Marketing Strategy

Marketing Concept

Example of the marketing concept being applied: McDonald’s adapts


its menu to suit Chinese tastes.

McDonald’s adapts its menu to


suit Chinese tastes.

69 © 2012 Principles of Marketing: An Asian Perspective


1.3 Designing a Customer-Driven Marketing Strategy

The selling and the marketing concepts contrasted

70 © 2012 Principles of Marketing: An Asian Perspective


1.3 Designing a Customer-Driven Marketing Strategy

The selling and the marketing concepts contrasted

The selling concept takes an inside-out perspective. It starts with the


factory, focuses on the company’s existing products, and calls for
heavy selling and promotion to obtain profitable sales. It focuses
primarily on customer conquest—getting short-term sales with little
concern about who buys or why.

71 © 2012 Principles of Marketing: An Asian Perspective


1.3 Designing a Customer-Driven Marketing Strategy

The selling and the marketing concepts contrasted

Implementing the marketing concept often means more than


responding to customers’ stated desires and obvious needs. Customer-
driven companies research deeply on current customers to learn about
their desires, gather new product and service ideas, and test proposed
product improvements

72 © 2012 Principles of Marketing: An Asian Perspective


18) Which of the following marketing management
orientations focuses primarily on improving
efficiencies along the supply chain?
A) production concept
B) product concept
C) selling concept
D) marketing concept
E) societal marketing concept

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19) Which of the following marketing
management concepts is most likely to lead to
marketing myopia?
A) customer-driven marketing
B) customer-driving marketing
C) societal marketing
D) marketing
E) product
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1.3 Designing a Customer-Driven Marketing Strategy

Customer-driven versus customer driving

75 © 2012 Principles of Marketing: An Asian Perspective


1.3 Designing a Customer-Driven Marketing Strategy

Customer-driven versus customer driving

In many cases, however, customers don’t know what they want or


even what is possible. For example, even 20 years ago, how many
consumers would have thought to ask for now-commonplace products
such as mobile phones, notebook computers, iPods, digital cameras,
24-hour online buying, and satellite navigation systems in their cars?

76 © 2012 Principles of Marketing: An Asian Perspective


1.3 Designing a Customer-Driven Marketing Strategy

Customer-driven versus customer driving

Such situations call for customer-driving marketing—understanding


customer needs even better than customers themselves do and
creating products and services that meet existing and latent needs,
now and in the future.

77 © 2012 Principles of Marketing: An Asian Perspective


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Agenda

1. What is Marketing?(quick review)


2. The Marketing Process
Understand the marketplace and customer needs and wants.
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.

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Agenda

The Marketing Process


Understand the marketplace and customer needs and wants.
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.

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G2000

28) Edmund Cheng of Wing Tai


Garments used the marketing
concept in his successful
organization. His perspective of
having a customer department in
his G2000 outlets uses a(n)
________ perspective..
A) customer-driven
B) external
C) inside-out
D) continuous improvement
E) traditional

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1.3 Designing a Customer-Driven Marketing Strategy

Societal Marketing Concept

Societal marketing
concept is the idea that a
company should make
good marketing decisions
by considering consumers’
wants, the company’s
requirements, consumers’
long-term interests, and
society’s long-run
interests.

82 © 2012 Principles of Marketing: An Asian Perspective


1.3 Designing a Customer-Driven Marketing Strategy

Societal Marketing Concept

The societal marketing concept questions whether the pure marketing


concept overlooks possible conflicts between consumer short-run
wants and consumer long-run welfare.

The societal marketing concept holds that marketing strategy should


deliver value to customers in a way that maintains or improves both
the consumer’s and the society’s well being.

83 © 2012 Principles of Marketing: An Asian Perspective


1.3 Designing a Customer-Driven Marketing Strategy

Societal Marketing Concept

It calls for sustainable marketing, socially and environmentally


responsible marketing that meets the present needs of consumers and
businesses while also preserving or enhancing the ability of future
generations to meet their needs.

84 © 2012 Principles of Marketing: An Asian Perspective


1.3 Designing a Customer-Driven Marketing Strategy

Societal Marketing Concept

Social innovation is essential to Hindustan Unilever – It offers a range of products to meet the
needs of the poor and has established a Fair & Lovely Foundation to empower women.

85 © 2012 Principles of Marketing: An Asian Perspective


1.3 Designing a Customer-Driven Marketing Strategy

Three considerations underlying the societal marketing


concept

Companies should
balance three considerations
in setting their marketing
strategies: company profits,
consumer wants, and
society’s interests.

86 © 2012 Principles of Marketing: An Asian Perspective


1.3 Designing a Customer-Driven Marketing Strategy

Societal Marketing Credo

The societal marketing concept – Johnson &


Johnson’s Credo emphasizes people before
profits. Its quick product recall following a tragic
Tylenol tampering incident some years ago cost
the company $100 million in earnings but
strengthened consumer confidence and loyalty.

87 © 2012 Principles of Marketing: An Asian Perspective


35) Which marketing orientation holds that
firms must strive to deliver value to customers
in a way that maintains or improves the
consumer's and society's well-being?
A) marketing concept
B) selling concept
C) product concept
D) societal marketing concept
E) equity concept
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30) Which of the following reflects the marketing concept
philosophy?
A) "We don't have a marketing department; we have a
customer department."
B) "We're in the business of Text
making and selling superior
products."
C) "We build them so you can buy them."
D) "When it's profits versus customers' needs, profits
will always win out."
E) "You won't find a better deal anywhere."

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1.4
Preparing an Integrated Marketing Plan and
Program

90 © 2012 Principles of Marketing: An Asian Perspective


1.4 Preparing an Integrated Marketing Plan and
Program

The marketing mix: set of tools (four Ps) the firm uses to implement
its marketing strategy. It includes product, price, promotion, and
place.

Integrated
marketing program:
comprehensive plan
that communicates and
delivers the intended
value to chosen
customers.

91 © 2012 Principles of Marketing: An Asian Perspective


1.5
Building Customer Relationships

92 © 2012 Principles of Marketing: An Asian Perspective


1.5 Building Customer Relationships

Customer Relationship Management (CRM)

• The overall process of building and maintaining profitable customer


relationships by delivering superior customer value and satisfaction.

• Managing customer “touch points”


in order to maximize customer loyalty.

93 © 2012 Principles of Marketing: An Asian Perspective


1.5 Building Customer Relationships

Relationship Building Blocks: Customer Value and Satisfaction

Customer- Customer
perceived value satisfaction

• The difference • The extent to


between total which a
customer value product’s
and total perceived
customer cost performance
matches a
buyer’s
expectations

94 © 2012 Principles of Marketing: An Asian Perspective


1.5 Building Customer Relationships

Value

Customer Value: the customer’s evaluation of the difference between


all the benefits and all the costs of a market offering relative to those
of competing offers

Customers often do not judge values and


costs “accurately” or “objectively.”
Customers act on customer
perceived value.

95 © 2012 Principles of Marketing: An Asian Perspective


1.5 Building Customer Relationships

Customer Perceived Value

96 © 2012 Principles of Marketing: An Asian Perspective


1.5 Building Customer Relationships

Customer Perceived Value

When deciding whether to purchase a Prius, customers will weigh its benefits
against the benefits of owning another hybrid or non-hybrid brand.

97 © 2012 Principles of Marketing: An Asian Perspective


1.5 Building Customer Relationships

Customer Satisfaction

• Depends on the product’s perceived performance relative to a


buyer’s expectations.
• If the product’s performance falls short
of expectations, the customer is
dissatisfied. If performance matches
expectations, the customer is satisfied.
If performance exceeds expectations,
the customer is highly satisfied
or delighted.

98 © 2012 Principles of Marketing: An Asian Perspective


1.5 Building Customer Relationships

Japanese Department Stores and Customer Satisfaction…

The recession has seen younger Japanese consumers seeking specialty


instead of department stores as consumers are dissatisfied with the latter.

99 © 2012 Principles of Marketing: An Asian Perspective


40) You have just taken a new position in an organization and you're
learning about the job functions of your new colleagues. You observe that
your marketing manager is heavily involved in the process of building and
maintaining profitable customer relationships. Your marketing manager
frequently speaks about the need to acquire, keep, and grow customers.
Your manager is concerned with which one of the following?
A) customer divestment
B) customer-managed relationships
C) the societal marketing concept
D) partner relationship management
E) customer relationship management

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42) It is most accurate to say that customers buy from
stores and firms that offer which of the following?
A) the highest value for the dollar
B) the highest customer-perceived value
C) the highest level of customer satisfaction
D) the most attractive company image
E) the most concern for society's interests

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43) The key to delivering customer satisfaction
is to match ________ with ________.
A) company performance; the competition's
performance
B) company performance; competitive prices
C) relationship building; performance tools
D) company performance; unique products
E) customer expectations; product performance
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1.5 Building Customer Relationships

Building Customer Relationships

Customer Relationship Levels and Tools

Basic
Relationships

Full
Partnerships

103 © 2012 Principles of Marketing: An Asian Perspective


1.5 Building Customer Relationships

Building Customer Relationships

Basic Relationships are often used by a company with many low-


margin customers. For example, Procter & Gamble does not phone or
call on all of its Tide consumers to get to know them personally.
Instead, P&G creates relationships through brand-building advertising,
sales promotions, and its Web site.

104 © 2012 Principles of Marketing: An Asian Perspective


1.5 Building Customer Relationships

Building Customer Relationships

Full Partnerships are used in markets with few customers and high
margins, sellers want to create full partnerships with key customers.
For example, P&G customer teams work closely with Wal-Mart,
Safeway, and other large retailers.
Some companies sponsor club marketing programs that offer
members special benefits and create member communities.
(For example, Harley-Davidson sponsors the Harley Owners Group
[H.O.G.].)

105 © 2012 Principles of Marketing: An Asian Perspective


1.5 Building Customer Relationships

Loyalty and Retention Programs

• Frequency marketing programs

• Club marketing programs

106 © 2012 Principles of Marketing: An Asian Perspective


1.5 Building Customer Relationships

The Changing Nature of Customer Relationships

• Relating with more carefully selected customers uses selective


relationship management to target fewer, more profitable customers

• Relating more deeply and interactively by incorporating more


interactive two way relationships through blogs, Websites, online
communities and social networks

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1.5 Building Customer Relationships

Relating with More Carefully Selected Customers

Nautica, in India, engaged a select group of


customers in outdoor activities to live the brand.

108 © 2012 Principles of Marketing: An Asian Perspective


1.5 Building Customer Relationships

Two-way Customer Relationships

Many companies now target fewer, more profitable customers using


selective relationship management to relate more deeply and
interactively to carefully selected customers through blogs, Websites,
online communities and social networks.

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1.5 Building Customer Relationships

Two-way Customer Relationships

Companies such as Pepsi are increasingly using new Technologies to involve consumers. On
RefreshEverything.com, Pepsi lets consumers have a say on what projects should benefit from
Pepsi’s giveback to the society.

110 © 2012 Principles of Marketing: An Asian Perspective


46) You are an assistant marketing director for a firm in
a market with many low-margin customers. What type
of relationship would be most profitable for you to
develop with these customers?
A) full partnerships
B) basic relationships
C) basic partnerships
D) club programs
E) selective relationships
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1.5 Building Customer Relationships

Use of Social Networks

Sony used its social networking site Backstage 101 as a way to build a community of users and
influence attitude and purchase towards Sony products. It was shut down later apparently
because customers were increasingly giving feedback that did not make Sony products look
favorable
112 © 2012 Principles of Marketing: An Asian Perspective
1.5 Building Customer Relationships

Consumer-Generated Marketing

• This is part of the new customer dialogue is consumer-generated


marketing, by which consumers themselves are playing a bigger
role in shaping their own brand experiences and those of others.

• This might happen through uninvited consumer-to-consumer


exchanges in blogs, video-sharing sites, and other digital forums.

• But increasingly, companies are inviting consumers to play a more


active role in shaping products and brand messages.

113 © 2012 Principles of Marketing: An Asian Perspective


1.5 Building Customer Relationships

Customer-Generated Marketing

Vitaminwater capitalized on Facebook for


consumer suggestions for a new flavor.

114 © 2012 Principles of Marketing: An Asian Perspective


Consumer-generated marketing

53) Which of the following is an


example of consumer-generated
marketing?
A) Toyota's presence in online
communities
B) Nike's Nike Plus running Web
site
C) MasterCard's use of "Priceless"
commercials shot by customers
D) Cathay Pacific’s Asia Miles
Rewards program for its best
customers
E) The Mitsubishi Fast-Lane aimed
at creating customer delight

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1.5 Building Customer Relationships

Partner relationship management

Partner relationship management involves working closely


with partners in other company departments and
outside the company to jointly bring
greater value to customers.

116 © 2012 Principles of Marketing: An Asian Perspective


1.5 Building Customer Relationships

Partner relationship management

OUTSIDE INSIDE

117 © 2012 Principles of Marketing: An Asian Perspective


1.5 Building Customer Relationships

Partner Relationship Marketing

Internal and External Partners that Marketers need to work with

118 © 2012 Principles of Marketing: An Asian Perspective


1.5 Building Customer Relationships

Partner Relationship Marketing- Partners Inside

• Partners inside the company is every function area interacting with


customers.

• Today, firms are linking all departments in the cause of creating


customer value.

• Rather than assigning only sales and marketing people to customers,


they are forming cross-functional customer teams.

119 © 2012 Principles of Marketing: An Asian Perspective


1.5 Building Customer Relationships

Partner Relationship Marketing- Partners Outside

• Partners outside the company is how marketers connect with their


suppliers, channel partners, and competitors by developing
partnerships.

• The supply chain describes a longer channel, stretching from raw


materials to components to final products that are carried to final
buyers. Through supply chain management, many companies today
are strengthening their connections with partners all along the
supply chain.

120 © 2012 Principles of Marketing: An Asian Perspective


1.5 Building Customer Relationships

Partner Relationship Marketing- Partners Outside

Lexus works closely with its franchise dealers


such as Borneo Motors in Singapore to provide
top-grade sales and service support.

121 © 2012 Principles of Marketing: An Asian Perspective


57) Suzie Chan strengthens her company's connections by
treating suppliers of raw materials, vendors, and distributors
as partners in delivering customer value. What type of
management is she practicing?
A) outside partnering
B) inside partnering
C) marketing
D) supply chain
E) customer development

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1.6
Capturing Value from Customers

123 © 2012 Principles of Marketing: An Asian Perspective


1.6 Capturing Value from Customers

Creating Customer Loyalty and Retention

• The aim of customer relationship management is to create not just


customer satisfaction, but customer delight. This means that
companies must aim high in building customer relationships.

• Companies are realizing that losing a customer means losing more


than a single sale. It means losing customer lifetime value.
Customer lifetime value is the value of the entire stream of
purchases that the customer would make over a lifetime of
patronage.

124 © 2012 Principles of Marketing: An Asian Perspective


1.6 Capturing Value from Customers

Share of customer

Share of customer is the portion of the customer’s purchasing that a


company gets in its product categories

125 © 2012 Principles of Marketing: An Asian Perspective


1.6 Capturing Value from Customers

Share of customer

Amazon.com increases its share of each


customer’s purchases by offering not just
music and videos, but also a slew of other
products including toys, home improvement
items, and an online auction. It also makes
product recommendations based on the
purchase history of individual customers.

126 © 2012 Principles of Marketing: An Asian Perspective


Airline

60) When an airline goes after a


"share of travel" from its
customers, it is attempting to
increase ________.
A) partner equity
B) share of customer
C) profit margins
D) customer-managed
relationships
E) customer ownership

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How to Increase Share of Customer

62) ________ is one of the best


ways to increase share of
customer.
A) Targeting new customers
B) Using bait and switch
C) Cross-selling
D) Divesting
E) Partnership marketing

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1.6 Capturing Value from Customers

Customer Equity

Customer equity is the total combined customer lifetime values of all


of the company’s customers

129 © 2012 Principles of Marketing: An Asian Perspective


1.6 Capturing Value from Customers

Customer Equity

• Clearly, the more loyal the firm’s profitable customers, the higher
the firm’s customer equity.
• Customer equity may be a better measure of a firm’s performance
than current sales or market share.
• Building the right relationships with the right customers involves
treating customers as assets that need to be managed and
maximized

130 © 2012 Principles of Marketing: An Asian Perspective


1.6 Capturing Value from Customers

Customer Relationship Groups

Key point: Different types of customers require different relationship


management strategies (see Real Marketing 1.1 from page 26 of the
textbook: Principles of Marketing: An Asian Perspective)

131 © 2012 Principles of Marketing: An Asian Perspective


Customer Relationship Groups

44) Which of the following is the


term for customers who make
repeat purchases and tell others
about their positive experiences
with a product or service?
A) barnacles
B) true friends
C) butterflies
D) full partners
E) social customers

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Customer Relationship Groups
68) Alfia, a team leader in charge of
customer relationship management, is
planning strategies for improving the
profitability of her firm's least
profitable but loyal customers. She is
also examining methods for "firing"
customers in this group who cannot
be made profitable. To which of the
following customer relationship groups
do these customers belong?
A) butterflies
B) true friends
C) strangers
D) barnacles
E) short-term customers

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1.6 Capturing Value from Customers

134 © 2012 Principles of Marketing: An Asian Perspective


Lexus

59) Lexus estimates that a single


satisfied and loyal customer is
worth $600,000 in lifetime
sales. Lexus’ concern is an
illustration of which of the
following?
A) share of customer
B) market share
C) partner relationship
management
D) customer lifetime value
E) market share maintenance

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1.7
The Changing Marketing Landscape

136 © 2012 Principles of Marketing: An Asian Perspective


1.7 The Changing Marketing Landscape

Digital age

• People are connected continuously to people


and information worldwide

• Marketers have great new tools to communicate


with customers

• Internet + mobile communication devices


creates environment for online marketing

137 © 2012 Principles of Marketing: An Asian Perspective


1.7 The Changing Marketing Landscape

Globalization

• Almost every company, large or small,


is touched in some way by
global competition.

• Today, companies are also buying


more supplies and components abroad.

Companies like McDonald’s have developed truly global


operations. This American icon captures 65 per cent of
its revenue outside of the U.S.

138 © 2012 Principles of Marketing: An Asian Perspective


1.7 The Changing Marketing Landscape

Sustainable Marketing
The Call for More Ethics and Social Responsibility

• Marketers are being called upon to take greater responsibility for the
social and environmental impact of their actions.

• Forward-looking companies view socially responsible actions as an


opportunity to do well by doing good.

139 © 2012 Principles of Marketing: An Asian Perspective


1.7 The Changing Marketing Landscape

The Growth of Not-for-Profit Marketing

• In recent years, marketing has also become a major part of the


strategies of many not-for-profit organizations, such as colleges,
hospitals, museums, zoos, symphony orchestras, and even churches.

• Government agencies have also shown an increased interest in


marketing by designing social marketing campaigns.

140 © 2012 Principles of Marketing: An Asian Perspective


1.7 The Changing Marketing Landscape

The Growth of Not-for-Profit Marketing

Social campaigns such as Filial


Piety, a television commercial by
the Ministry of Community
Development, Youth and Sports,
apply marketing to instil among
Singaporeans social values such
as a sense of filial piety to their
elders.

141 © 2012 Principles of Marketing: An Asian Perspective


72) Which of the following statements about the Internet is most
accurate?
A) Companies are cautiously using the Internet to build closer
relationships with customers and marketing partners alike.
B) After the dot-com meltdown of 2000, fewer consumers are buying
products and services online.
C) The Internet makes it easy for consumers to view, interact with, and
create marketing content.
D) Consumer e-commerce looks promising, but business-to-business e-
commerce is declining.
E) Web 2.0 involves a less balanced approach to online marketing than
the original dot-com boom did.

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CHAPTER REVIEW

78) Cathy's Clothes is a small retail chain successfully selling


women's clothing and accessories with a profitable focus on
buyers who have relatively modest means. This is an example
of ________.
A) convenience
B) social marketing
C) societal marketing
D) target marketing
E) value packing

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79) An organic farmer has identified three distinct groups
who might be interested in his products: vegetarians, people
who are concerned about chemicals in their foods, and people
who consider themselves innovators and trendsetters. These
three groups are examples of ________.
A) marketing mixes
B) market segments
C) value propositions
D) mass markets
E) marketing intermediaries

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80) Jolene's firm markets preplanning services for a
mortician. She finds that most of her target market
wants to avoid discussing their future funeral needs,
and she must somehow first get their attention. Jolene's
firm most likely practices the ________.
A) production concept
B) marketing concept
C) selling concept
D) social marketing concept
E) societal marketing concept
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Lenovo

81) Lenovo dominates the highly


competitive, price-sensitive
Chinese PC market through low
labor costs, high production
efficiency, and mass distribution.
This reflects the ________
concept.
A) product
B) production
C) selling
D) marketing
E) societal marketing

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Railroads

82) Railroads were once operated


based on the thinking that users
wanted trains rather than
transportation, overlooking the
challenge of other modes of
transportation. This reflects the
________ concept.
A) product
B) production
C) selling
D) marketing
E) societal marketing

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Fast Food

83) Some fast-food restaurants


offer tasty and convenient food at
affordable prices, but in doing so
they contribute to a national
obesity epidemic and
environmental problems. These
fast-food restaurants overlook the
________ philosophy.
A) marketing concept
B) product concept
C) production concept
D) societal marketing concept
E) selling concept
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FedEx

84) FedEx offers its customers fast


and reliable package delivery.
When FedEx customers weigh
these benefits against the
monetary cost of using FedEx
along with any other costs of using
the service, they are acting upon
________.
A) loyalty
B) relationship marketing
C) customer-perceived value
D) social relationships
E) a societal marketing campaign
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Brand X lotion

85) Sally purchased Brand X


lotion. In comparing her
perception of how the lotion made
her skin feel and look to her
expectations for Brand X lotion,
Sally was measuring her level of
________.
A) share of customer
B) customer satisfaction
C) customer equity
D) demand
E) customer lifetime value

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Nike

86) The Nike town running club


that organizes twice weekly
evening runs and follow-up
meetings in the Nike Store is an
example of which of the following?
A) a frequency marketing program
B) a basic customer relationship
C) a club marketing program
D) a partner relationship
E) a structural benefit provided for
top customers

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87) Elsie, a marketing manager at
a regional chain restaurant, has
decided to sponsor a contest
calling for customers to create
commercials for the restaurant.
Winning entries will be posted on
the organization's home page.
Elisandra's plan is an example of
________.
A) consumer-generated marketing
B) partner relationship
management
C) customer lifetime value
D) community development
around a brand
E)Presentation
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Kao Corporation

88) Kao Corp., which makes Ban


deodorant, invited teenage girls to
make an ad that would encourage
other girls to buy the product. This
program is an example of
________.
A) societal marketing
B) the production concept
C) the selling orientation
D) partner relationship
management
E) consumer-generated content

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89) At Gina's Nails, the posted policy is "Without our customers,
we don't exist." Gina and her staff aim to delight each customer,
and they are quick to offer discounts or extra services whenever
a customer is anything less than satisfied. Gina and her staff
strive to make every customer a repeat customer. It is most
accurate to say that instead of focusing on each individual
transaction, Gina and her staff put a priority on ________.
A) partner relationship management
B) enlisting customer evangelists
C) attracting "butterflies"
D) converting "strangers"
E) capturing customer lifetime value
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What kind of marketing?
92) Your government has
budgeted a significant amount of
money for a radio, print,
television, and online advertising
campaign emphasizing the long-
term benefits, both educationally
and professionally, of reading
every day. This is an example of
a(n) ________ campaign.
A) ethical
B) social marketing
C) for-profit
D) consumer-generated
E) differentiated

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The Marketing Concept

94) Which of the following reflects


the marketing concept?
A) "The supplier is king."
B) "Marketing should be viewed as
foraging and not gardening."
C) "This is what I make; won't you
please buy it?"
D) "This is what I want; won't you
please make it?"
E) "Customers need to be told
where they want to go."

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