Download Marketing is managing profitable customer relationships.

Principles of Marketing
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Fall 2009 - MKTG 220
 Dr. Abdullah Sultan
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Let’s Get to Know Each Other 
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Split up into small groups of five students.
Tell the group about where you live, brands
to which you are most loyal, your favorite
movies, restaurants, music, cars, mobiles,
etc.
One person in each group will be responsible
for collecting information about each member
in the group, then the person will
introduce/market the members to us.
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What is marketing?
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Old versus New Marketing
OLD View
of Marketing:
Making a Sale –
“Telling & Selling”
NEW
New View
View
ofofMarketing:
Marketing:
Satisfying
Satisfying
customer Needs
needs
Customer
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What is Marketing?
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AMA defines marketing as an organizational
function and a set of processes for creating,
communicating, and delivering value to
customers and for managing customer
relationships in ways that benefit the
organization and its shareholders.
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What Is Marketing?
Simple Definition:
Marketing is managing profitable customer
relationships.
Goals:
1. Attract new customers by satisfying
needs/wants and promising superior value.
2. Keep and grow current customers by
delivering satisfaction.
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What do you think of this statement?
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Seth Godin, an expert in the marketing
field, said “We are living in a society where
we have everything we need and hence we
are left selling what customers want”.
It is extremely important for us as product
managers to clearly understand what our
customers are asking for - is it a real need
or is it a want?
Needs, Wants, & Demands
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Need:
State of felt deprivation including physical,
social, and individual needs.
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Physical needs:
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Social needs:
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Food, clothing, shelter, safety
Belonging, friendship, family, love
Individual needs:
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Learning, knowledge, self-expression
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Needs, Wants, & Demands
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Wants:
The form that human needs take, as shaped by
culture and individual personality
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We need food, but want Mr. Baker Cake
We need transportation, but want an expensive car
We need water, but want cold Pepsi
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Wants + Buying Power = Demand
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Marketers change “wants” to “needs”
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Need / Want Fulfillment
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Needs and wants are fulfilled through a
Marketing Offer:
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Some combination of products, services,
information, or experiences offered to a market to
satisfy a need or want.
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For Next Class, Think about this…
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Why is it important to truly understand the
customer? Make a list of 3 “wants” that you
have. What would have to occur to move
each of these from “wants” to “needs?”
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What Is a Market?
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The set of actual and potential buyers of a
product. Or the place demand (buyers) and
supply (sellers) meet.
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These people share a need or want that can
be satisfied through exchange relationships.
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Modern Marketing Systems
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Main elements in a modern marketing system
include:
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Suppliers
Company
Competitors
Marketing intermediaries
Final users (customers)
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Marketing Management
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The art and science of choosing target
markets and building profitable relationships
with them.
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Requires that consumers and the marketplace be
fully understood
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Marketing Management Philosophies
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Production Concept
Product Concept
Selling Concept
Marketing Concept (implementation of
market/customer orientation)
Societal Marketing Concept
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Marketing Management
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Designing a winning marketing strategy
requires answers to the following questions:
1. What customers will we serve?
What is our target market?
2. How can we best serve these
customers?
What is our value proposition?
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Segmentation & Target Marketing
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Market Segmentation:
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Divide the market into segments of customers
Target Marketing:
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Select the segment to cultivate
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Customer Relationship Management (CRM)
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The art of using customer databases to build
and maintain profitable customer
relationships by delivering superior customer
value and satisfaction.
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Acquiring customers (initiate relationship)
Keeping customers (maintain relationship)
Growing customers (enhance relationship)
That is, market to each customer individually
rather than market to a mass of people
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Building Customer Relationships
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One of the perceived benefits of CRM is that
it enables firms to retain satisfied customers
who would be willing to pay.
The four steps in the customer relationship
management (CRM):
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Understanding the marketplace and customer
needs
Designing a customer-driven marketing strategy
Constructing marketing programs leading to
Building profitable customer relationships
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Customer Relationships
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Loyalty and retention programs build
relationships and may feature:
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Financial Benefits
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Social Benefits
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EX: Frequency marketing programs (e.g., Sultan Center
Card, Watani Rewards Points)
EX: marketing clubs (e.g., Our Marketing Club, National
Union of Kuwaiti Students)
Successful marketers focus on relating
directly to profitable customers, for the
longterm.
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Customer Satisfaction
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Satisfied customers are willing to pay
premium price for the product or service
that they receive.
Customer satisfaction depends on the
product’s perceived performance relative
to a buyer’s expectations.
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Customer satisfaction often leads to consumer loyalty.
Some firms seek to DELIGHT customers by
exceeding expectations.
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Customer Satisfaction
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Care must be taken when setting
expectations:
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If performance is lower than expectations,
satisfaction is low (dissatisfied customer).
If performance is equal expectations, satisfaction
is met (satisfied customer).
If performance is higher than expectations,
satisfaction is high (delighted customer).
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The Marketing Process
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A simple model of the marketing process:
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Understand the marketplace and customer needs
and wants.
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.
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In-Class Activity
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In a small group, develop an entertainment
service targeted toward college students.
How will you enable them to get the best
value? Define what you mean by value and
develop the value proposition of your offering
for the target market.
Hint: You should segment and target a specific
market.