Chapter 1

Marketing: Managing Profitable Customer Relationships

Marketing : A process that help companies create value for customers and build strong customer relationships to get value in return from customers. Key elements of Marketing Definition: Social and managerial process Needs and wants Creating and exchanging value with others.

Marketing Process

A model of marketing process

Understand customer needs and wants Build profitable relationships and create customer delight

Design customer oriented marketing strategy

Construct marketing program that delivers superior value

Capture customer value from customer to create profits and customer quality

Marketing Process

Is a five step model First four steps understand consumers, create consumer value and build strong relationships. In the final step company receives the benefits of creating superior customer value.

Understanding market place and consumer needs

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Needs: state of felt deprivation Wants: different forms of fulfilling needs Wants are shaped by culture Buying power Status etc. Demand: human wants backed by buying power and willingness to spend. Products are demanded to gain value and satisfaction from the product to satisfy needs.

Understanding market place and consumer needs

Marketing Offer: are in the form of products, services, information, or experiences offered to a market to satisfy a need or a want. Marketing offers include other entities like persons, places, organizations, information and ideas. Marketing myopia: when focus is on the product than on the benefits and experiences.

Understanding market place and consumer needs

Customer Value: is what a customer expects from the product to satisfy needs. Satisfaction: is the match between the consumer expectations and fulfillment of expectations from the product. Satisfaction is a post consumption behavior. Satisfied customer repurchases, spreads word of mouth and maintains long term relationship with the company. Dissatisfied consumer switches to competitors brands and disparages the product.

Understanding market place and consumer needs

Exchange: The act of obtaining a desired object from someone by offering something in return. Relationships: are actions aimed at build and maintain relationships to retain customers on long term basis. Markets: are a set of actual and potential buyers of a product or a service.

Elements of modern marketing system

Company Suppliers Competitors Marketing Intermediaries End Users

Marketing Management: The art and science of choosing target markets and building profitable relationships with them on long term. Focus is on knowing which customers the company wants to serve? How can these customers be served best? Or what is value proposition offered to them?

Selecting customers to serve

Who will be served is determined by market Segmentation and Target Markets. Segmentation is dividing markets into groups on the basis of common characteristics. Target market is the most profitable segment selected to be served. De-marketing is a method to reduce or shift demand temporarily or permanently, but not to destroy markets.

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Choosing Value Propositions

How will it differentiate and position products, brand, image in the market place. Companys Value proposition is a set of benefits it promises to deliver to consumers to satisfy their needs. Value propositions differentiate brands

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Marketing orientations

Production concept believes that consumers favor products that are highly affordable and available in abundance. This philosophy is applicable under two conditions when demand exceeds supply When cost of production is too high

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Product and selling Concept

Consumers favor products that offer high quality, performance and features. - Continuous Product improvement is the essence. Selling Concept believes that consumers will not buy enough product without enough promotion efforts. - Used when capacity of production exceeds - Creates sales transactions but not build long term customer relationships.

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Marketing Concept & Societal Marketing concept

Achieving Organizational goals depends on identifying target markets needs and wants and delivering desired satisfactions better than competitors. Refer fig 1.3 pg 11 to compare selling and marketing concepts. Societal Marketing Concept focuses on the long term welfare of the society than short run consumer wants. Refer (fig 1.4 pg 11 of text)

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Building customer relationships

CRM is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. Customer perceived value is the difference between total customer value and total customer cost. Customer satisfaction is degree to which products perceived performance matches buyers expectations.

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Capturing Value from customers

CRM creates customer delight. Delighted customer becomes loyal Loyal customer speaks favorably to other customers Loyal customer are retained longer with the company. Customer lifetime value is the life time patronage extended by loyal customers.

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Capturing Value from customers

Share of customer is the percentage of total market who purchase the companys products. Customer equity is the total combined customer lifetime values of all the companys customers. Refer fig 1.5 pg 22. for customer relationship groups. Digital technology enabled greater interaction between the markets and company. Refer fig 1.6 marketing process.

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Chapter review

Customer equity Customer life time value Customer perceived value Customer relationship management Customer satisfaction Demand Exchange Market Marketing Marketing concept Needs

Marketing offer Product concept Production concept Selling concept Societal marketing concept.

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