Chapter 1 Marketing Managing Profitable Customer Relationships Copyright
Chapter 1 Marketing: Managing Profitable Customer Relationships Copyright © 2008 Pearson Education Canada Principles of Marketing, Seventh Canadian Edition
Learning Goals 1. 2. 3. 4. 5. Define marketing and outline the marketing 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 the marketing management orientations. Discuss customer relationship management and identify strategies for creating and capturing value from customers. Describe the major trends and forces changing the marketing landscape. Copyright © 2008 Pearson Education Canada 2 Principles of Marketing, Seventh Canadian Edition
NASCAR –What is their secret? • NASCAR is the #1 televised motorsport in Canada • Compelling blend of live racing events, media coverage and Web sites • Show the customer a good time • To develop customer relationship NASCAR creates a wholesome family-oriented environment. Copyright © 2008 Pearson Education Canada • Fans are passionate about NASCAR • Fans spend nearly $700 a year on NASCAR merchandise • Second highest regular season sport on TV • NASCAR attracts over 250 big-name sponsors • Big part of the NASCA experience is the feeling of accessibility 3 Principles of Marketing, Seventh Canadian Edition
Learning Goals 1. 2. 3. 4. 5. Define marketing and outline the marketing 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 the marketing management orientations. Discuss customer relationship management and identify strategies for creating and capturing value from customers. Describe the major trends and forces changing the marketing landscape. Copyright © 2008 Pearson Education Canada 4 Principles of Marketing, Seventh Canadian Edition
What is Marketing? • Marketing is about managing profitable customer relationships – Attracting new customers – Retaining and growing current customers • Marketing Defined: – “Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging value with others” Copyright © 2008 Pearson Education Canada 5 Principles of Marketing, Seventh Canadian Edition
Learning Goals 1. 2. 3. 4. 5. Define marketing and outline the marketing 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 the marketing management orientations. Discuss customer relationship management and identify strategies for creating and capturing value from customers. Describe the major trends and forces changing the marketing landscape. Copyright © 2008 Pearson Education Canada 6 Principles of Marketing, Seventh Canadian Edition
Understanding the Marketplace • Core Concepts • Need – Understand the marketplace and customer wants and needs – 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 Copyright © 2008 Pearson Education Canada – State of felt deprivation • Wants – The form of needs as shaped by culture and the individual • Demands – Wants which are backed by buying power 7 Principles of Marketing, Seventh Canadian Edition
Understanding the Marketplace • Marketing offer • Core Concepts – Understand the marketplace and customer wants and needs (cont. ) – 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 Copyright © 2008 Pearson Education Canada – Combination of products, services, information or experiences that satisfy a need or want – Offer may include services, activities, people, places, information or ideas 8 Principles of Marketing, Seventh Canadian Edition
Understanding the Marketplace • Core Concepts • Value – Understand the marketplace and customer wants and needs (cont. ) – 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 Copyright © 2008 Pearson Education Canada – Customers form expectations regarding value – Marketers must deliver value to consumers • Satisfaction – A satisfied customer will buy again and tell others about their good experience 9 Principles of Marketing, Seventh Canadian Edition
Discussion Questions Customer Satisfaction ? • When have you, personally, been extremely satisfied or dissatisfied with a product? Why? • Why is it so difficult for companies to deliver value to consumers? Copyright © 2008 Pearson Education Canada 10 Principles of Marketing, Seventh Canadian Edition
Understanding the Marketplace • Core Concepts • Exchange – Understand the marketplace and customer wants and needs (cont. ) – 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 Copyright © 2008 Pearson Education Canada – 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 11 Principles of Marketing, Seventh Canadian Edition
Understanding the Marketplace • Core Concepts • Market – Understand the marketplace and customer wants and needs (cont. ) – 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 Copyright © 2008 Pearson Education Canada – Set of actual and potential buyers of a product – Marketers seek buyers that are profitable 12 Principles of Marketing, Seventh Canadian Edition
Learning Goals 1. 2. 3. 4. 5. Define marketing and outline the marketing 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 the marketing management orientations. Discuss customer relationship management and identify strategies for creating and capturing value from customers. Describe the major trends and forces changing the marketing landscape. Copyright © 2008 Pearson Education Canada 13 Principles of Marketing, Seventh Canadian Edition
Designing a Customer-Driven Marketing Strategy • Marketing management is “the art and science of choosing target markets and building profitable relationships with them. ” • A winning marketing strategy – What customers will we serve? – How can we serve these customers best? Copyright © 2008 Pearson Education Canada 14 Principles of Marketing, Seventh Canadian Edition
Designing a Customer-Driven Marketing Strategy • What customers will we serve? – Market segmentation and target marketing – Marketers select customers that can be served profitably – Known as customer management and demand management • How can we serve these customers best? – By defining a value proposition that will differentiate and position the brand in the marketplace – Is set of benefits or values a company promises to deliver to consumers in order to satisfy their needs Copyright © 2008 Pearson Education Canada 15 Principles of Marketing, Seventh Canadian Edition
Netflix – DVDs by mail • Netflix began in early 2000 • DVDs are delivered to your home with return mail envelope • Monthly charge with unlimited rentals – limited amount out at one time Copyright © 2008 Pearson Education Canada 16 Principles of Marketing, Seventh Canadian Edition
Discussion Questions Netflix ? 1. How might Netflix define its target market? 2. What need or want does it fulfill? 3. What is its marketing offer? 4. What is its value proposition? Is it a strong value proposition for its target market? Copyright © 2008 Pearson Education Canada 17 Principles of Marketing, Seventh Canadian Edition
Marketing Management Orientations • The Production Concept – Consumers will favour products that are available and highly affordable • The Product Concept – Consumers will favour products that offer the most in quality, performance, and innovative features Copyright © 2008 Pearson Education Canada 18 Principles of Marketing, Seventh Canadian Edition
Marketing Management Orientations • The Selling Concept – Consumers will not buy enough of the firm’s products unless it undertakes a large-scale selling effort. • The Marketing Concept – Achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do. Copyright © 2008 Pearson Education Canada 19 Principles of Marketing, Seventh Canadian Edition
Marketing Management Orientations • The Societal Marketing Concept – The marketing strategy should deliver value to customers and other stakeholders affected by marketing decisions in a way that maintains or improves the consumer’s and the society’s well-being. Copyright © 2008 Pearson Education Canada 20 Principles of Marketing, Seventh Canadian Edition
Preparing a Marketing Plan and Program • Build customer relationships by transforming the marketing strategy into action • Includes the marketing mix and the 4 P’s of marketing – Product – Price – Place – Promotion Copyright © 2008 Pearson Education Canada 21 Principles of Marketing, Seventh Canadian Edition
Learning Goals 1. 2. 3. 4. 5. Define marketing and outline the marketing 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 the marketing management orientations. Discuss customer relationship management and identify strategies for creating and capturing value from customers. Describe the major trends and forces changing the marketing landscape. Copyright © 2008 Pearson Education Canada 22 Principles of Marketing, Seventh Canadian Edition
Building Customer Relationships • CRM – Customer relationship management. . . “is 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. ” Copyright © 2008 Pearson Education Canada 23 Principles of Marketing, Seventh Canadian Edition
Relationship Building Blocks: Value and Satisfaction • Customer Perceived Value – The customers’ evaluation of the difference between benefits and costs. – Customers often do not judge values and costs accurately or objectively. • Customer Satisfaction – Product’s perceived performance relative to customers’ expectations. Copyright © 2008 Pearson Education Canada 24 Principles of Marketing, Seventh Canadian Edition
Customer Relationship Levels and Tools • Basic relationships – low margin customers • Full partnerships – key customers • Frequency marketing programs – Reward customers who buy frequently or in large amounts • Club marketing programs – Offer members special discounts and create member communities Copyright © 2008 Pearson Education Canada 25 Principles of Marketing, Seventh Canadian Edition
The Changing Nature of Customer Relationships • Relating with more Carefully Selected Customers • Relating for the Long-Term • Relating Directly Copyright © 2008 Pearson Education Canada 26 Principles of Marketing, Seventh Canadian Edition
Partnership Relationship Management • Working closely with partners in other company departments and outside the company to jointly bring greater value to customers • Partners Inside the Company • Partners Outside the Firm – Strategic partners – Supply chain management Copyright © 2008 Pearson Education Canada 27 Principles of Marketing, Seventh Canadian Edition
Capturing Value from Customers • Creating Customer Loyalty and Retention – Customer delight leads to emotional relationships and loyalty – Customer lifetime value shows true worth of a customer • Growing Share of Customer – Share of customer’s purchase in a product category – Achieved through offering greater variety, cross-sell and up-sell strategies Copyright © 2008 Pearson Education Canada 28 Principles of Marketing, Seventh Canadian Edition
Capturing Value from Customers • Building Customer Equity – The combined customer lifetime values of all current and potential customers – Measures a firm’s performance, but in a manner that looks to the future – Choosing the “best” customers is key Copyright © 2008 Pearson Education Canada 29 Principles of Marketing, Seventh Canadian Edition
Capturing Value from Customers • The company can classify customers according to their potential profitability and manage its relationships accordingly. Copyright © 2008 Pearson Education Canada 30 Principles of Marketing, Seventh Canadian Edition
Learning Goals 1. 2. 3. 4. 5. Define marketing and outline the marketing 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 the marketing management orientations. Discuss customer relationship management and identify strategies for creating and capturing value from customers. Describe the major trends and forces changing the marketing landscape. Copyright © 2008 Pearson Education Canada 31 Principles of Marketing, Seventh Canadian Edition
The New Marketing Landscape • Challenges • Advances in computers, telecommunications information, transportation – The Digital Age – Rapid Globalization – Ethics and Social responsibility – Not-for-profit Marketing Copyright © 2008 Pearson Education Canada – Customer research and tracking – Product development – Distribution – New advertising tools – 24/7 marketing through the Internet 32 Principles of Marketing, Seventh Canadian Edition
The New Marketing Landscape • Challenges • Geographical and cultural distances have shrunk – The Digital Age – Rapid Globalization – Ethics and Social responsibility – Not-for-profit Marketing Copyright © 2008 Pearson Education Canada – Greater market coverage – More options for purchasing and manufacturing – Increased competition from foreign competitors 33 Principles of Marketing, Seventh Canadian Edition
The New Marketing Landscape • Challenges • Marketers need to take great responsibility for the impact of their actions – The Digital Age – Rapid Globalization – Ethics and Social responsibility – Not-for-profit Marketing Copyright © 2008 Pearson Education Canada – Caring capitalism is a way to differentiate your company 34 Principles of Marketing, Seventh Canadian Edition
The New Marketing Landscape • Challenges • Many non-profit organizations are realizing the importance of strategic marketing – The Digital Age – Rapid Globalization – Ethics and Social responsibility – Not-for-profit Marketing Copyright © 2008 Pearson Education Canada – – – 35 Performing arts Government agencies Colleges Hospitals Churches Principles of Marketing, Seventh Canadian Edition
What is Marketing? • The process of building profitable customer relationships by creating value for customers and capturing value in return Copyright © 2008 Pearson Education Canada 36 Principles of Marketing, Seventh Canadian Edition
Learning Goals 1. 2. 3. 4. 5. Define marketing and outline the marketing 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 the marketing management orientations. Discuss customer relationship management and identify strategies for creating and capturing value from customers. Describe the major trends and forces changing the marketing landscape. Copyright © 2008 Pearson Education Canada 37 Principles of Marketing, Seventh Canadian Edition
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