1 Marketing Managing Profitable Customer Relationships ROAD MAP

1 Marketing: Managing Profitable Customer Relationships

ROAD MAP: Previewing the Concepts • • What is marketing? Key steps in the marketing process. Consumers’ needs and wants. Five core marketplace concepts. Key elements of a customer-driven marketing strategy. Marketing management orientations that guide marketing strategy. Customer relationship management and strategies. Major trends and forces that are changing the marketing landscape in this new age of relationships. Professor Takada 1 -2

What is Marketing? Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders. Professor Takada 1 -3

What is Marketing Management? Marketing management is the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value. Professor Takada 1 -4

Selling is only the tip of the iceberg “There will always be need for some selling. But the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy. All that should be needed is to make the product or service available. ” Peter Drucker Professor Takada 1 -5

Designing the “Right” Product Professor Takada 1 -6

Only the best is good enough for Lexus customers Professor Takada 1 -7

Key Customer Markets Consumer Markets Global Markets Business Markets Nonprofit/ Government Markets Professor Takada 1 -8

ROAD MAP: • • What is marketing? Key steps in the marketing process. Consumers’ needs, wants, and demands. Five core marketplace concepts. Key elements of a customer-driven marketing strategy. Marketing management orientations that guide marketing strategy. Customer relationship management and strategies. Major trends and forces that are changing the marketing landscape in this new age of relationships. Professor Takada 1 -9

A Simple Model of the Marketing Process Create value for customers and build customer relationships Understand the marketplace and customer needs and wants Design a customerdriven marketing strategy Construct a marketing program that delivers superior value Capture value from customers in return Build profitable relationships and create customer delight Professor Takada Capture value from customers to create profits and customer equity 1 -10

ROAD MAP: Previewing the Concepts • • What is marketing? Key steps in the marketing process. Consumers’ needs, wants, and demands. Five core marketplace concepts. Key elements of a customer-driven marketing strategy. Marketing management orientations that guide marketing strategy. Customer relationship management and strategies. Major trends and forces that are changing the marketing landscape in this new age of relationships. Professor Takada 1 -11

Needs - state of felt deprivation including physical, social, and individual needs. Types of Needs • Physical: – Food, clothing, shelter, safety • Social: – Belonging, affection • Individual: – Learning, knowledge, self-expression Wants - form that a human need takes, as shaped by culture and individual personality. Professor Takada 1 -12

I want it, I need it… 5 Types of Needs • Stated needs • Real needs • Unstated needs • Delight needs • Secret needs Professor Takada 1 -13

What is Marketed? Goods Services Events & Experiences Persons Places & Properties Organizations Information Ideas Professor Takada 1 -14

Marketing Goods Professor Takada 1 -15

Marketing Ideas: Friends Don’t Let Friends Drive Drunk This is the watch Stephen Hollingshead, Jr. was wearing when he encountered a drunk driver. Time of death 6: 55 p. m. Professor Takada 1 -16

What Satisfies Consumers’ Needs and Wants? Products Anything that can be Offered to a Market to Satisfy a Need or Want Persons Places Information Organizations Ideas Services Activity or Benefit Offered for Sale That is Essentially Intangible and Does Not Result in the Ownership of Anything Professor Takada 1 -17

Product as an Idea Products do not have to be physical objects. Here the “product” is an idea —protecting animals. Professor Takada 1 -18

Marketing Myopia • Sellers pay more • attention to the specific products they offer than to the benefits and experiences produced by the products. They focus on the “wants” and lose sight of the “needs. ” Professor Takada 1 -19

Value and Satisfaction Expectation 8 Performance Expectation Performance 10 8 10 If performance is lower than expectations, satisfaction is low. If performance is higher than expectations, satisfaction is high. Professor Takada 1 -20

A Simple Marketing System Professor Takada 1 -21

Elements of a Modern Marketing System Professor Takada 1 -22

Structure of Flows in a Modern Exchange Economy Professor Takada 1 -23

Marketing Management • The art and science of choosing target markets and building profitable relationships with them. 1. Questions to ask: What customers will we serve? What is our target market? 2. How can we best serve these customers? What is our value proposition? Professor Takada 1 -24

Segmentation and Target Marketing #1 #2 Market Segmentation: Divide the market into segments of customers Target Marketing: Select the segment to cultivate Professor Takada 1 -25

Marketing Management Demand Management Demarketing Finding and increasing demand, also changing or reducing demand, such as in demarketing. Temporarily or permanently reducing the number of customers or shifting their demand. Professor Takada 1 -26

ROAD MAP: • • What is marketing? Key steps in the marketing process. Consumers’ needs and wants. Five core marketplace concepts. Key elements of a customer-driven marketing strategy. Marketing management orientations that guide marketing strategy. Customer relationship management and strategies. Major trends and forces that are changing the marketing landscape in this new age of relationships. Professor Takada 1 -27

Marketing Management Philosophies Societal Marketing Concept Selling Concept Production Concept Professor Takada 1 -28

Marketing and Sales Concepts Contrasted Professor Takada 1 -29

Societal Marketing Concept Professor Takada 1 -30

Corporate Social Initiatives Professor Takada 1 -31

Corporate Social Initiatives Professor Takada 1 -32

Holistic Marketing Dimensions Professor Takada 1 -33

ROAD MAP: • • What is marketing? Key steps in the marketing process. Consumers’ needs and wants. Five core marketplace concepts. Key elements of a customer-driven marketing strategy. Marketing management orientations that guide marketing strategy. Customer relationship management and strategies. Major trends and forces that are changing the marketing landscape in this new age of relationships. Professor Takada 1 -34

The Marketing Mix Product Price Customer Needs Promotion Distribution Professor Takada 1 -35

Marketing-Mix Strategy Professor Takada 1 -36

Marketing Mix and the Customer Four P’s • Product • Price • Place • Promotion Four C’s • Customer solution • Customer cost • Convenience • Communication Professor Takada 1 -37

Factors Influencing Marketing Strategy Professor Takada 1 -38

Marketing Management Tasks • Developing marketing • Shaping market • • • strategies Capturing marketing insights Connecting with customers Building strong brands • Professor Takada offerings Delivering value Communicating value Creating long-term growth 1 -39

ROAD MAP: • • What is marketing? Key steps in the marketing process. Consumers’ needs and wants. Five core marketplace concepts. Key elements of a customer-driven marketing strategy. Marketing management orientations that guide marketing strategy. Customer relationship management and strategies. Major trends and forces that are changing the marketing landscape in this new age of relationships. Professor Takada 1 -40

Customer Relationship Management • The process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. Customer Perceived Value • Customer’s evaluation of the difference between all the benefits and all the costs of a marketing offer relative to those of competing offers. Professor Takada 1 -41

Customer Relationship Levels Basic Relationship Continuum Professor Takada Full Partnership 1 -42

Loyalty and Retention Social Benefits Financial Benefits Structural Ties Professor Takada 1 -43

Partner Relationship Marketing Partners Inside the Firm 1. All employees customer focused 2. Teams coordinate efforts toward customers Partners Outside the Firm 1. Supply chain management 2. Strategic alliances Professor Takada 1 -44

Customer Loyalty & Retention • Customer Lifetime Value – The entire stream of purchases that the customer would make over a lifetime of patronage. • Share of Customer – The share a company gets of the customers purchasing in their product categories. Customer Equity • Customer equity is the total combined customer lifetime values of all the company’s customers. Professor Takada 1 -45

Customer Relationship Groups Butterflies High Good fit between company’s offerings and customer’s needs; high profit potential True Friends Good fit between company’s offerings and customer’s needs; highest profit potential Profitability Strangers Low Little fit between company’s offerings and customer’s needs; lowest profit potential Barnacles Limited fit between company’s offerings and customer’s needs; low profit potential Short-term customers Long-term customers Projected loyalty Professor Takada 1 -46

ROAD MAP: • • What is marketing? Key steps in the marketing process. Consumers’ needs and wants. Five core marketplace concepts. Key elements of a customer-driven marketing strategy. Marketing management orientations that guide marketing strategy. Customer relationship management and strategies. Major trends and forces that are changing the marketing landscape in this new age of relationships. Professor Takada 1 -47

The Internet • The Internet has been hailed as the technology behind a New Economy. • Marketing applications include: – “Click-and-mortar” companies – “Click-only” companies – Business-to-business e-commerce • Business-to-business transactions online are expected to reach $4. 3 trillion in 2005. • By 2005, 500, 000 companies will use the Internet to do business. Professor Takada 1 -48

New Marketing Landscape Rapid Globalization Not-for-Profit Marketing Ethics & Social Responsibility New World of Marketing Relationships Professor Takada 1 -49

Global Markets Coke is represented at the first China International Beverage Festival in Beijing in 2003 Professor Takada 1 -50

The marketplace isn’t what it used to be… Changing technology Globalization Deregulation Privatization Empowerment Customization Convergence Disintermediation Professor Takada 1 -51

Core Concepts • Needs, wants, and • • • demands Target markets, positioning, segmentation Offerings and brands Value and satisfaction • Marketing channels • Supply chain • Competition • Marketing • Professor Takada environment Marketing planning 1 -52

Rest Stop: Reviewing the Concepts 1. Define marketing and outline the steps in the marketing 2. 3. 4. 5. 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 marketing management orientations that guide marketing strategy. Discuss customer relationship management and strategies for building lasting customer relationships. Describe the major trends and forces that are changing the marketing landscape in this new age of relationships. Professor Takada 1 -53