Chapter One Marketing Managing Profitable Customer Relationships With
Chapter One Marketing: Managing Profitable Customer Relationships With Duane Weaver 1 -1
OUTLINE • • • Marketing – defined Marketing Mix – defined Market - defined Marketing Process – discussed Needs vs. Wants and Buyer Motivation P for Product – deeper analysis OOPS – Marketing Myopia Value Marketing Concepts Not for Profit Marketing 1 -2
What is Marketing? 1 -3
What is Marketing? “…a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging value with others. ” Armstrong, et. al. , p. 7 1 -4
What is a Market? 1 -5
What is a Market? • The set of actual and potential buyers of a product, service or experience. – Also seen traditionally as a marketplace where the business transaction (or trade) is enacted between buyers and sellers. For example: • • A bizarre Flea market Farmer’s market Retail Store Wholesale Outlet Online Internet Store Cell Phone’s digital radio waves • In Marketing when we talk about potential markets we usually are referring to a set of buyers. • These people share a need or want that can be satisfied through exchange relationships. 1 -6
What is successful Marketing? • Attracting new customers by promising and delivering superior value. • Building long-term relationships with customers by delivering continued customer satisfaction. • Creating, building and managing these relationships profitably over time. 1 -7
What is the Marketing Mix? P P 1 -8
The Four Ps (marketing mix) • Product • Price • Place • Promotion 1 -9
The Marketing Process 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 equity. 1 -10
Needs vs. Wants and Buyer Motivation - needs • Needs are states of felt deprivation. – Physical: • Food, clothing, shelter, safety. – Social: • Belonging, affection. – Individual: • Learning, knowledge, self-expression. 1 -11
Abraham Maslow’s Hiearchy of Needs Solomon, Zaichowsky, Polegato, 2008 1 -12
Needs vs. Wants and Buyer Motivation - wants • SO then, …what is a “WANT”? 1 -13
Needs vs. Wants and Buyer Motivation - Motivational Strength • Biological vs. Learned Needs (innate instinct vs. learned behaviour) • Drive Theory (achieving homeostasis by satiating tension caused by the arousal of unpleasant states) • Expectancy Theory pulled by positive incentives (goals) rather than pushed from within 1 -14
Needs vs. Wants and Buyer Motivation - Motivational Direction • MOTIVES tend to be directional • Needs vs. Wants – Need = unsatisfied requirement (hunger) – Want = the way a person satisfies a need which ultimately is dependent on “their historical reality” (cheeseburger vs. trail mix) • Types of Needs – Biogenic or psychogenic • Motivational Conflicts Fig. 4 -1 Solomon, Zaichowsky, Polegato, 2008 1 -15
P for product = Deeper Analysis • Products – Anything that can be offered for: • • • acquisition, attention, use or consumption That might satisfy a need or want. • Services – Activities or benefits offered. – Essentially intangible. – Do not result in ownership of anything. • Experiences – Create, stage and market brand experiences. – Attending live theatre, music concert. • Ideas – Solutions, consultation, patents, innovations. 1 -16
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. ” – The great railroads lost out to the exploding trucking industry. – They forgot that their business was solving transportation problems, not running railroads. 1 -17
Value and Satisfaction • If the performance and the customer’s experience is lower than expectations, then customer satisfaction is low. • If the performance and the customer’s experience meets expectations, then the customer is satisfied. • If the performance and the customer’s experience exceeds expectations, then the customer is delighted. – How can we do this? 1 -18
Core Marketplace Concepts • Customers have needs, wants and demands. • Marketers offer products or services. • Customers seek value and satisfaction from offers. • Demands and offers result in transactions and relationships. • Markets are all potential customers with a similar demand. 1 -19
Customer-Driven Marketing 1. Divide markets into segments. 2. Choose the right segment to target. 3. Offer a unique value proposition. 4. Differentiate your offer from competitor offers. 5. Build customer value and satisfaction. 6. Nurture long-term customer relationships. 1 -20
Segmentation and Targeting • Segmentation divides the market into groups of customers with varying needs and wants. • Targeting selects the right segment to nurture. • Types of Market Segmentation (see Chp. 2): • • 1 -21 Demographic variables Geographic location Behavioural variables Psychographic variables
Demand Management • Marketing management seeks to control demand. – Increasing demand is the norm. – Demarketing seeks to reduce demand in certain circumstances. 1 -22
Value Proposition The set of benefits or values the company promises to deliver to its target markets to satisfy their needs. 1 -23
Capturing Value In Return • Customer lifetime value • Share of customer • Building Customer Equity – The total combined customer lifetime value of all of the company’s customers – Combination of market share, share of customer and lifetime customer value – Often a more accurate measure of a company’s value than sales or market share 1 -24
Marketing Concepts • Production – affordability and availability. • Product -- quality and innovation. • Selling -- promotion and hard selling. • Marketing -- customer satisfaction and relationships. • Societal – long-term value to both customer and society. 1 -25
Not-For-Profit Marketing • Marketing of ideas, values and institutions. • Increasing awareness that these organizations must build relationships with constituents and stakeholders. • Challenge of using new marketing techniques for not-for-profit initiatives. 1 -26
Thanks! Do Happy Customers = Successful Companies? Expectation Management is Key 1 -27
REVIEW Let’s Discuss your Marketing Examples What is good? Why? What is bad? Why? Please use what you have read and learned today to describe the reasons for your choices. 1 -28
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