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

Capture
Understand 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
equity

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
• Value proposition
• Set of benefits or values it promises to deliver to customers to satisfy their
needs.
• Answers the customer question “Why should I buy the product
• BMW value proposition: The ultimate driving machine
• Ford value proposition: Built Ford Tough!
 Marketing Management
Orientations
• Production concept: The idea that consumers will favor products that are
available and highly affordable and that the organization should therefore
focus on improving production and distribution efficiency
• Product concept: The idea that consumers will favor products that offer the
most quality, performance, and features and that the organization should
therefore devote its energy to making continuous product improvements.
• Selling concept: The idea that consumers will not buy enough of the firm’s
products unless it undertakes a large-scale selling and promotion effort.
• Marketing concept: A philosophy that holds that achieving organizational
goals depends on knowing the needs and wants of target markets and
delivering the desired satisfactions better than competitors do.
• Societal marketing concept: The idea that a company’s marketing decisions
should consider consumers’ wants, the company’s requirements,
consumers’ long-run interests, and society’s long-run interests.

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

AT&T “We are a telephone “We are a communications

company” company”

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

Nintendo “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
Concept
Consumers 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