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PRINCIPLE OF MARKETING
Chapter 01
Marketing: Managing Profitable Customer Relationships
Learning Objectives
1. 2.
3.
4.
5.
After studying this chapter, you should be able to: Define marketing and outline the steps in 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 that guide marketing strategy Discuss customer relationship management, and identify strategies for creating value for customers and capturing value from customers in return Describe the major trends and forces that are changing the marketing landscape in this age of relationships
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Chapter Concepts
1. 2. 3. 4. 5. 6. 7. 8.
What Is Marketing? Understanding the Marketplace and Customer Needs Designing a Customer-Driven Marketing Strategy Preparing an Integrated Marketing Plan and Program Building Customer Relationships Capturing Value from Customers The New Marketing Landscape So, What Is Marketing? Pulling It All Together
What Is Marketing?
Marketing is a process by which companies create value for customers and build strong customer relationships to capture value from customers in return
What Is Marketing?
The Marketing Process
1. 2. 3. 4. 5.
Understand the marketplace and customer wants and needs Design a customer-driven marketing strategy Construct a marketing plan that delivers superior value Build profitable relationships and create customer satisfaction Capture value from customers to create profit and customer equity
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What Is Marketing?
The Marketing Process
Understanding the Marketplace and Customer Needs
Customer Needs, Wants, and Demands Needs are states of deprivation
Physicalfood, clothing, warmth, safety Socialbelonging and affection Individualknowledge and self-expression
Understanding the Marketplace and Customer Needs
Customer Needs, Wants, and Demands Wants are the form that needs take as they are shaped by culture and individual personality Demands are wants backed by buying power
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Understanding the Marketplace and Customer Needs
Market OfferingsProduct, Services, and Experiences
Market offerings are some combination of products, services, information, or experiences offered to a market to satisfy a need or want
Understanding the Marketplace and Customer Needs
Market OfferingsProducts, Services, and Experiences Marketing myopia is focusing only on existing wants and losing sight of underlying consumer needs
Understanding the Marketplace and Customer Needs
Customer Value and Satisfaction
Expectations
Customers
Value and satisfaction Set the right level of expectations
Marketers
Not too high or low
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Understanding the Marketplace and Customer Needs Exchanges and Relationships
Exchange is the act of obtaining a desired object from someone by offering something in return Marketers want to build and maintain strong relationships by consistently delivering superior customer value
Understanding the Marketplace and Customer Needs
Markets are the set of actual and potential buyers of a product Marketing system consists of all of the actors (suppliers, company, competitors, intermediaries, and end users) in the system affected by major environmental forces Demographic Technological Economic Politicallegal Socio-cultural Physical
Understanding the Marketplace and Customer Needs Elements of a Marketing System
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Designing a Customer-Driven Marketing Strategy
Marketing management is the art and science of choosing target markets and building profitable relationships with them
What customers will we serve? How can we best serve these customers?
Designing a Customer-Driven Marketing Strategy
Selecting Customers to Serve Market segmentation refers to dividing the markets into segments of customers Target marketing refers to which segments to go after
Designing a Customer-Driven Marketing Strategy
Selecting Customers to Serve Demarketing is marketing to reduce demand temporarily or permanently; the aim is not to destroy demand but to reduce or shift it.
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Designing a Customer-Driven Marketing Strategy
Selecting Customers to Serve Marketing management is:
Customer management Demand management
Designing a Customer-Driven Marketing Strategy
Marketing Management Orientations
Production concept Product concept Selling concept Marketing concept Societal concept
Designing a Customer-Driven Marketing Strategy
Marketing Management Orientations Production concept is the idea that consumers will favor products that are available or highly affordable
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Designing a Customer-Driven Marketing Strategy
Marketing Management Orientations Product concept is the idea that consumers will favor products that offer the most quality, performance, and features that the organization should therefore devote its energy to making continuous improvements
Designing a Customer-Driven Marketing Strategy
Marketing Management Orientations Selling concept is the idea that consumers will not buy enough of the firms products unless it undertakes a large scale selling and promotion effort
Designing a Customer-Driven Marketing Strategy
Marketing Management Orientations
Marketing concept is the idea that achieving organizational goals depends on knowing the needs and wants of the target markets and delivering the desired satisfactions better than competitors do
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Designing a Customer-Driven Marketing Strategy
Marketing Management Orientations
Designing a Customer-Driven Marketing Strategy
Marketing Management Orientations
Societal marketing concept is the idea that a company should make good marketing decisions by considering consumers wants, the companys requirements, consumers long-term interests, and societys long-run interests
Preparing an Integrated Marketing Plan and Program
Marketing Mix The marketing mix is the set of tools (four Ps) the firm uses to implement its marketing strategy Product Price Promotion Place
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Preparing an Integrated Marketing Plan and Program
4Cs model of Lautheborn euquavelance correspond to 4Ps of Mc Carthy
4 Ps P1: Product P2: Price P3: Place P4: Promotion
4 Cs C1: Customer needs and wants C2: Cost to the customer C3: Convenience C4: Communication
Building Customer Relationships
Customer Relationship Management (CRM)
The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction
Building Customer Relationships
Customer Relationship Management (CRM)
Relationship Building Blocks: Customer Value and Satisfaction Customer perceived value is the difference between total customer value and total customer cost Customer satisfaction is the extent to which a products perceived performance matches a buyers expectations
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Building Customer Relationships
Customer Relationship Management (CRM)
Customer Relationship Levels and Tools
Basic relationship Full partnerships Frequency marketing programs Club marketing programs
Building Customer Relationships
The Changing Nature of Customer Relationships
Relating with more carefully selected customers uses selective relationship management to target fewer, more profitable customers Relating for the long-term to retain current customers and build profitable, long-term relationships Relating directly uses direct marketing tools (telephone, mail-order, kiosks, Internet) to make direct connections with customers
Building Customer Relationships
Partner Relationship Management
Partner relationship management involves working closely with partners in other company departments and outside the company to jointly bring greater value to customers
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Capturing Value from Customers
Creating Customer Loyalty and Retention Customer lifetime value is the value of the entire stream of purchases that the customer would make over a lifetime of patronage
Capturing Value from Customers
Building Customer Equity Customer equity is the total combined customer lifetime values of all of the companys customers
Capturing Value from Customers
Building Customer Equity Building the right relationships with the right customers involves treating customers as assets that need to be managed and maximized Different types of customers require different relationship management strategies
Build the right relationship with the right customers
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The New Marketing Landscape
Major Developments
Digital age Rapid globalization Ethics and social responsibility Not-for-profit marketing
The New Marketing Landscape
The New Digital Age
Recent technology and the growth in computers, telecommunications, information, and transportation have had a major impact on the ways marketers connect with and bring value to their customers Market research Distribution Communication
Video conferencing Online data services
The New Marketing Landscape
The New Digital Age Internet creates marketplaces and marketspaces
Information Entertainment Communication
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The New Marketing Landscape
Rapid Globalization
The world is smaller Think globally, act locally
The New Marketing Landscape
The Call for More Ethics and Social Responsibility
Marketers are being called upon to take greater responsibility for the social and environmental impact of their actions in a global economy
The New Marketing Landscape
The Call for More Ethics and Social Responsibility Social marketing campaigns encourage energy conservation and concern for the environment or discourage smoking, excessive drinking, and drug use
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The New Marketing Landscape
The Growth for Not-for-Profit Marketing
Colleges Hospitals Museums Zoos Orchestras Religious groups
The Marketing Environment
Marketing Environment The marketing environment includes the actors and forces outside marketing that affect marketing managements ability to build and maintain successful relationships with customers
The Companys Microenvironment
Marketing Environment Macroenvironment consists of the larger societal forces that affect the microenvironment Demographic Economic Natural Technological Political Cultural
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The Companys Macroenvironment
The Companys Microenvironment
Marketing Environment Microenvironment consists of the actors close to the company that affect its ability to serve its customers, the company, suppliers, marketing intermediaries, customer markets, competitors, and publics
The Companys Microenvironment
Actors in the Microenvironment
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Porters Five Forces Model of Competition
Threat of New Entrants
Bargaining Power of Suppliers
Rivalry Among Competing Firms in Industry
Bargaining Power of Buyers
Threat of Substitute Products
Assessing Marketing Information Needs
Marketing information system (MIS) consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers
Assess the information needs Develop needed information Analyze information Distribute information
Assessing Marketing Information Needs
MIS provides information to the companys marketing and other managers and external partners such as suppliers, resellers, and marketing service agencies
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Assessing Marketing Information Needs
Characteristics of a good MIS balances the information users would like to have against what they need and what is feasible to offer
Assessing Marketing Information Needs
Developing Marketing Information
Marketers can obtain information from:
Internal data Marketing intelligence Marketing research
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Developing Marketing Information
Internal Data
Internal databases are electronic collections of consumer and market information obtained from data sources within the company network, including accounting, marketing, customer service, and sales departments
Developing Marketing Information
Advantages and Disadvantage of Internal Databases
Advantages Can be accessed more quickly Less expensive
Disadvantages Incomplete information Wrong form for decision making Timeliness of information Amount of information Need for sophisticated equipment and techniques
Developing Marketing Information
Marketing Intelligence Marketing intelligence is the systematic collection and analysis of publicly available information about competitors and developments in the marketplace The goal is to improve strategic decision making, assess and track competitors actions, and provide early warning of opportunities and threats
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Developing Marketing Information
Marketing Research
Marketing research is the systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization
Developing Marketing Information
Marketing Research Steps in the marketing research process Defining the problem and research objectives 1. Developing the research plan 2. Implementing the plan 3. Interpreting and reporting the findings 4.
Developing Marketing Information
Steps in the Marketing Research Process
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Developing Marketing Information
Marketing Research
Defining the Problem and Research Objectives
Types of objectives Exploratory research Descriptive research Causal research
Developing Marketing Information
Marketing Research
Defining the Problem and Research Objectives Exploratory research is the gathering of preliminary information that will help to define the problem and suggest hypotheses Descriptive research is to describe things such as market potential for a product or the demographics and attitudes of consumers who buy the product Causal research is to test hypotheses about cause-andeffect relationships
Developing Marketing Information
Marketing Research
Developing the Research Plan
Research plan outlines sources of existing data and spells out the specific research approaches, contact methods, sampling plans, and instruments that researchers will use to gather data
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Developing Marketing Information
Marketing Research
Developing the Research Plan Research plan is a written proposal that includes: Management problem Research objectives Information needed How the results will help management decisions Budget
Developing Marketing Information
Marketing Research
Developing the Research Plan
Secondary data consists of information that already exists somewhere, having been collected for another purpose Primary data consists of information gathered for the special research plan
Developing Marketing Information
Marketing Research
Gathering Secondary Data
Advantages
Disadvantages
Speed Cost Provides data that a company cannot collect on its own
Availability Relevance Accuracy Impartial
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Developing Marketing Information
Marketing Research
Primary Data Collection
Research approaches Contact methods Sampling plan Research instruments
Table 4.2 Planning Primary Data Collection
Analyzing Marketing Information1
Customer Relationship Management (CRM)
CRM consists of sophisticated software and analytical tools that integrate customer information from all sources, analyze it in depth, and apply the results to build stronger customer relationships
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Analyzing Marketing Information
Customer Relationship Management (CRM)
Data warehouses are comprehensive companywide electronic databases of finely tuned detailed customer information Uses
To To To To
understand customers better provide higher levels of customer service develop deeper customer relationships identify high-value customers
Analyzing Marketing Information
Customer Relationship Management
Touch points are every contact between the customer and company Customer purchases Sales force contacts Service and support calls Web site visits Satisfaction surveys Credit and payment interactions Research studies
Distributing and Using Marketing Information
Information distribution involves entering information into databases and making it available in a time-useable manner Intranet provides information to employees and other stakeholders Extranet provides information to key customers and suppliers
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Other Marketing Information Considerations
Marketing Research in Small Businesses and Nonprofit Organizations Need information about their industry, competitors, potential customers, and reactions to new offers Must track changes in customer needs and wants, reactions to new products, and changes in the competitive environment
Other Marketing Information Considerations
Public Policy and Ethics in Marketing Research
Intrusions on consumer privacy Consumer resentment Misuse of research findings
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