Marketing: Managing

Profitable Customer
Relationships

Chapter 1

1
Learning Goals
1. Define marketing and the marketing process.

2. Explain the importance of understanding customers and

identify the five core marketplace concepts

3. Identify the elements of a customer-driven marketing

strategy and discuss the marketing management
orientations.

4. Discuss customer relationship management

What is Marketing?
 Marketing Defined:
“The process by which companies create
value for the customers and build strong
customer relationships in order to capture
value from customers in return”

 Marketing is about managing profitable

customer relationships

 The twofold goal of marketing is-

 Attracting new customers
 Retaining and growing current customers
Goal 1: Define marketing and the marketing process.
The Marketing Process
Create value for customers and build Capture value from customers in
customer relationships return

Understand
Capture
Construct a Build
the value
Design a marketing profitable
marketplace from
Customer- program relationships
and customers
driven that and create
customer to create
needs and
marketing delivers customer profits
wants strategy superior delight and
value
customer
quality

Goal 1: Define marketing and the marketing process.

Understanding the Marketplace and
customer needs
Needs, wants, and demands
 Need
 State of felt deprivation
 Example: Need food
 Wants
 The form needs as shaped by culture and the
individual
 Example: Want a Big Mac
 Demands
 Wants which are backed by buying power
Understanding the Marketplace and
customer needs
 Marketing offers:
 Products
 Services
 Events
 Experiences
 Persons
 Places
 Ideas
 Organizations
 Information
Understanding the Marketplace and
customer needs
 Value and satisfaction
 Value
 Customer-perceived value
 Customer’s evaluation of the difference between all the
benefits and all the cost of a market offering relative to
those of competing products.
 Customers form expectations regarding value
 Marketers must deliver value to consumers

 Satisfaction
 Customer satisfaction
 The extent to which a product’s perceived performance
matches a buyer’s expectations
 A satisfied customer will buy again and tell others about
their good experience
Understanding the Marketplace and
customer needs
 Exchange, transactions and relationships
 Exchange
 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

 Markets
 Market
 Set of actual and potential buyers of a product
 Marketers seek buyers that are profitable
Marketing Management
 Marketing management is the art and
science of choosing target markets and
building profitable relationships with them.

 This definition must include answers to two

questions:

 What customers will we serve?

 How can we serve these customers best?

Goal 3: Identify elements of a customer-driven strategy.

Marketing Management
 Selecting customers to serve
 Dividing the market into segments of
customers- Market segmentation
 Selecting which segments it will go after-
Target marketing
 Demarketing

 Value proposition
 Set of benefits or values it promises to deliver
to customers to satisfy their needs.
Value Proposition

iPhone Nokia

Nokia
Marketing Management Orientations

 Production concept  Selling concept

 Product concept  Marketing concept

□ Societal marketing concept

Goal 3: Identify elements of a customer-driven strategy.

The Production Concept
 Assumes that consumers are interested
primarily in product availability at low
prices

 Marketing objectives:
 Cheap, efficient production
 Intensive distribution
 Market expansion
The Product Concept
 Assumes that consumers will buy the
product that offers them the highest
quality, the best performance, and the
most features

 Marketing objectives:
 Quality improvement
 Addition of features
Marketing Myopia

 A focus on the existing product only rather than

the consumer needs it presumes to satisfy

 Management’s failure to recognize the scope of

the business

 Product-oriented rather than customer-oriented

management endangers future growth
Avoiding Marketing Myopia by focusing on
benefits
Company Myopic Description Marketing oriented
description

Cingular “We are a telephone “We are a communications

company” company”

JetBlue Airways “We are in the airline “We are in the transportation
business” business”

Sony “We are in the video We are in the entertainment

game business” Business
The Selling Concept
 Assumes that consumers are unlikely to
buy a product unless they are
aggressively persuaded to do so

 Marketing objectives:
 Sell, sell, sell

 Lack of concern for customer needs and

satisfaction
The Marketing Concept
 Assumes that to be successful, a company
must determine the needs and wants of
specific target markets and deliver the
desired satisfactions better than the
competition

 Marketing objectives:
 Profits through customer satisfaction
 Societal Marketing Concept
• Assumes that marketing strategy should
deliver value to customers in a way that
maintain and improves both the consumer’s
and society’s well-being
Society
(Human Welfare)

Societal
Marketing
Consumers Concept Company
(Want Satisfaction) (Profits)
The Marketing Plan
 Transforms the marketing strategy into
action
 Includes the marketing mix -The 4P’s of
marketing
 Product
 Price
 Place
 Promotion

Goal 3: Identify elements of a customer-driven strategy.

Marketing mixes- 4P’s
 Product
 Firm must first create a need satisfying market
offering
 Price
 Decide how much it will charge for the offer
 Place
 Decide how it will make the offer available to
target consumers
 Promotion
 Communicate with target customers about the
offer and persuade them of its merit

Goal 3: Identify elements of a customer-driven strategy.

Building Customer Relationships
 CRM–Customer relationship
management

 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.

Goal 4: Discuss CRM