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Marketing: Managing Profitable Customer Relationships Chapter 1 Objectives • Be able to define marketing and discuss its core concepts. • Be able to define marketing management and compare the five marketing management orientations. 1-1 Objectives • Understand customer relationship management and strategies. • Realize the major challenges facing marketers in the new “connected” millennium. 1-2 What is Marketing? • Marketing is managing profitable customer relationships Attracting new customers Retaining and growing current customers • “Marketing” is NOT synonymous with “sales” or “advertising” 1-3 What is Marketing? Marketing Defined Marketing is the process by which companies create value for customers and build strong customer relationships to capture value from customers in return 1-4 The Marketing Process • 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 1-5 What is Marketing? Many Things Can Be Marketed! • Goods • Places • Services • Properties • Experiences • Organizations • Events • Information • Persons • Ideas 1-6 Understanding the Marketplace and Customer Needs Customer Needs, Wants, and Demands • Needs are states of deprivation Physical—food, clothing, warmth, safety Social—belonging and affection Individual—knowledge & self-expression 1-7 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 1-8 Understanding the Marketplace and Customer Needs Market Offerings—Products, Services & Experiences • Market offerings are some combination of products, services, information, or experiences offered to a market to satisfy a need or want 1-9 Understanding the Marketplace and Customer Needs Marketing myopia is focusing only on existing wants and losing sight of underlying consumer needs Exchange is the act of obtaining a desired object from someone by offering something in return 1 - 10 Marketing management is the art & science of choosing target markets & building profitable relationships with them • What customers will we serve? • How can we best serve these customers? • Selecting Customers to Serve Market segmentation: Dividing the markets into segments of customers 1 - 11 Selecting Customers to Serve • Target marketing: Which segments to go after • Choosing a Value Position: It is the set of benefits or values a company promises to deliver to customers to satisfy their needs, how it will differentiate & position itself in the market place. • De-marketing: Marketing to reduce demand temporarily or permanently; the aim is not to destroy demand but to reduce or shift it. 1 - 12 Designing a Customer-Driven Marketing Management Marketing Strategy Management Orientations • Production concept • Product concept • Selling concept • Marketing concept • Societal marketing concept 1 - 13 Marketing Management Orientations • Production concept is the idea that consumers will favor products that are available or highly affordable 1-19 1 - 14 Marketing Management Orientations • Product concept is the idea that consumers will favor products that offer the most quality, performance & features for which the organization should therefore devote its energy to making continuous improvements 1-20 1 - 15 Marketing Management Orientations • Selling concept is the idea that consumers will not buy enough of the firm’s products unless it undertakes a large scale selling and promotion effort 1 - 16 Marketing Management Orientations • Marketing concept is the idea that achieving organizational goals depends on knowing the needs & wants of the target markets & delivering the desired satisfactions better than competitors do. 1 - 17 Starting Point Factory Focus Existing products Means Ends Selling & Promoting Profit through sales volume The Selling Concept Starting Point Market Focus Customer Needs Means Ends Integrated Profit through Marketing Customer Satisfaction The Marketing Concept 1 - 18 Marketing Management Orientations • Societal marketing concept is the idea that a company should make good marketing decisions by considering consumers’ wants, the company’s requirements, consumers’ long-term interests, and society’s long-run interests. 1 - 19 Marketing Mix The marketing mix is the set of tools (four Ps) the firm uses to implement its marketing strategy • Product • Price • Promotion • Place 1 - 20 CRM • CRM – Customer relationship management . . . “is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.” 1 - 21 Customer Relationship Management (CRM) • Customer perceived value is the difference between total customer value and total customer cost • Customer satisfaction is the extent to which a product’s perceived performance matches a buyer’s expectations • Customer lifetime value is the value of the entire stream of purchases that the customer would make over a lifetime of patronage 1 - 22 Capturing Value from Customers • Growing Share of Customer: Share of customer is the portion of the customer’s purchasing that a company gets in its product categories • Building Customer Equity: Customer equity is the total combined customer lifetime values of all of the company’s customers 1 - 23