Marketing: Managing Profitable Customer Relationships h Chapter 1

Wh is Marketing? What M k ? • Marketing is managing profitable customer t relationships l ti hi ƒ Attracting g new customers ƒ Retaining and growing current customers

• “Marketing Marketing”” is NOT synonymous with ith “sales sales” l ” or “advertising advertising” d ti i ” 1-1

Wh is Marketing? What M k ? • Kotler Kotler’’s social definition: “Marketing is a social and managerial g process p by y which individuals and groups obtain what they y need and want through creating and g g products p and exchanging value with others.” others.” 1-2

What is Marketing? Many Things Can Be Marketed! • Goods

• Places

• Services

• Properties

• Experiences p • Organizations g • Events

• Information

• Persons

• Ideas 1-3

What is Marketing? Core Marketing Concepts • Needs, wants, and demands • Marketing offers: including products, services and experiences

• Value and satisfaction • Exchange, transactions and relationships • Markets

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M k Marketing M Management • Marketing management is “the art and science of choosing target markets and building profitable relationships l ti hi with ith th them.” them.” ƒ Creating, delivering and communicating superior customer value is key. 1-5

M k Marketing M Management • Customer Management: ƒ Marketers select customers that can be served well and profitably. profitably

• Demand Management: g ƒ Marketers must deal with different demand states ranging from no demand to too much demand.

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Marketing Management M k Marketing M Management Management Orientations • Production concept

• Selling concept

• Marketing • Product concept concept • Societal marketing concept 1-7

CRM • CRM – Customer relationship management . .. “is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.” satisfaction.”

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CRM • It costs 5 to 10 times MORE to attract a new customer than it does to keep a current customer t satisfied. ti fi d • Marketers must be concerned with the lifetime value of the customer. t 1-9

CRM Key Concepts • Attracting, retaining g and growing customers • Building customer relationships and customer equity

• Customer value/satisfaction ƒ Perceptions are key ƒ Meeting/exceeding expectations creates satisfaction • Loyalty and retention ƒ Benefits B fit off loyalty l lt ƒ Loyalty increases as satisfaction levels increase ƒ Delighting D li hti consumers should be the goal • Growing share of customer ƒ Cross Cross--selling 1 - 10

CRM Key Concepts • Attracting, retaining g and growing customers • Building customer relationships and customer equity

• Customer equity ƒ The total combined customer t lifetime lif ti values of all customers. ƒ Measures a firm’ firm’s performance, but in a manner that looks to the future.

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CRM Key Concepts • Attracting, retaining g and growing customers • Building customer relationships and customer equity

• Customer C t relationship l ti hi levels and tools ƒ Target market typically dictates type of relationship Basic relationships ™ Full relationships ™

ƒ Customer loyalty and retention programs Adding financial benefits ™ Adding social benefits ™ Adding Addi structural t t l ti ties ™

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M k Marketing Ch ll Challenges • Technological advances, rapid globalization, l b li ti and d continuing ti i social i l and economic shifts are causing marketplace k t l changes. h • Major j marketing g developments p can be grouped under the theme Connecting. g. of Connecting 1 - 13

M k Marketing Ch ll Challenges Connecting • Via technology • With customers t g • With marketing partners • With th the world ld

• Advances in computers, telecommunications, video--conferencing, video conferencing etc etc. are major forces. ƒ Databases allow for customization of products, messages and analysis of needs.

• The Th IInternet t t ƒ Facilitates anytime, anywhere connections ƒ Facilitates F ilit t CRM ƒ Creates marketspaces 1 - 14

M k Marketing Ch ll Challenges Connecting • Via technology • With customers t g • With marketing partners • With th the world ld

• Selective relationship management is key. ƒ Customer profitability analysis separates winners from losers.

• Growing “share of customer”” customer ƒ CrossCross-selling and upupselling are helpful.

• Direct sales to buyers are growing. 1 - 15

M k Marketing Ch ll Challenges Connecting • Via technology • With customers t g • With marketing partners • With th the world ld

• Partner relationship management g involves: ƒ Connecting inside the company ƒ Connecting with outside partners ™ Supply

chain management g ™ Strategic alliances 1 - 16

M k Marketing Ch ll Challenges Connecting • Via technology • With customers t g • With marketing partners • With th the world ld

• Globalization ƒ Competition ƒ New opportunities

• Greater concern for environmental and social responsibility • Increased marketing g by nonprofit and public--sector entities public ƒ Social marketing campaigns 1 - 17