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Marketing:
Managing Profitable Customer
Relationships
What Is Marketing?
• Simple Definition: Marketing is
managing profitable customer
relationships.
Goals:
1. Attract new customers by promising
superior value.
2. Keep and grow current customers
by delivering satisfaction.
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Marketing Old vs. New
Old view of marketing:
Making a sale ̶ “Telling and Selling”
New view of marketing:
Satisfying customer needs
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Marketing Defined
A social and managerial
process by which individuals
and groups obtain what they
need and want through
creating and exchanging
products and value with
others.
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A Simple Model of the Marketing Process
Create value for customers and
build customer relationships
Understand the
marketplace and
customer needs
and wants
Design a customerdriven marketing
strategy
Construct a
marketing program
that delivers superior
value
Capture value from
customers in return
Build profitable
relationships and create
customer delight
Capture value from
customers to create
profits and customer
equity
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What are Consumers’
Needs, Wants, and
Demands?
This Is a Need
Needs - state of felt
deprivation
including physical,
social, and
individual needs.
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Types of Needs
• Physical:
– Food, clothing, shelter, safety
• Social:
– Belonging, affection
• Individual:
– Learning, knowledge, self-expression
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This Is a Want
Wants - form that
a human need
takes, as
shaped by
culture and
individual
personality.
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This Is Demand
Wants
Buying Power
“Demand”
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Need / Want Fulfillment
• Needs and Wants
Fulfilled through a
Marketing Offer :
– Some combination of
products, services,
information, or
experiences offered to a
market to satisfy a need
or want.
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What Satisfies Consumers’
Needs and Wants?
Products
Anything that can be Offered to a Market to Satisfy a Need or Want
Persons
Places
Information
Organizations
Ideas
Services
Activity or Benefit Offered for Sale That is Essentially
Intangible and Does Not Result in the Ownership of Anything
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Marketing Myopia
• Sellers pay more
•
attention to the specific
products they offer than
to the benefits and
experiences produced
by the products.
They focus on the
“wants” and lose sight
of the “needs.”
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Value and Satisfaction
Expectation
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Performance
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Expectation
Performance
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If performance is lower than expectations, satisfaction is low.
If performance is higher than expectations, satisfaction is high.
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Exchange vs. Transaction
• Exchange:
– Act of obtaining a desired object from
someone by offering something in return.
• Transaction:
– A trade of values between two parties.
– One party gives X to another party and
gets Y in return. Can include cash, credit,
check, or barter.
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What is a Market?
• The set of actual
and potential buyers
of a product.
• These people share
a need or want that
can be satisfied
through exchange
relationships.
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Marketing Management
• The art and science of choosing target
markets and building profitable
relationships with them.
Questions to ask:
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 and Target Marketing
#1
#2
Market Segmentation:
Divide the market into
segments of customers
Target Marketing:
Select the segment to
cultivate
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Marketing Management
Demand
Management
Demarketing
Finding and increasing
demand, also changing or
reducing demand such as in
demarketing.
Temporarily or permanently
reducing the number of
customers or shifting their
demand.
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Value Proposition
• The set of benefits
or values a company
promises to deliver
to consumers to
satisfy their needs.
It cleans and freshens like
sunshine!
http://www.gainlaundry.com
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Marketing Management Philosophies
Societal Marketing Concept
Marketing Concept
Selling Concept
Product Concept
Production Concept
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Marketing and Sales Concepts Contrasted
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Societal Marketing Concept
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The Marketing Mix
Product
Price
Customer
Needs
Promotion
Distribution
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Customer Relationship Management
• The process of
building and
maintaining
profitable customer
relationships by
delivering superior
customer value and
satisfaction.
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Customer Perceived Value
• Customer’s evaluation
of the difference
between all the
benefits and all the
costs of a marketing
offer relative to those
of competing offers.
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Customer Satisfaction
• Dependent on the
product’s perceived
performance relative
to a buyer’s
expectations.
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Customer Relationship Levels
Basic
Relationship
Continuum
Full
Partnership
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Loyalty and Retention
Social
Benefits
Financial
Benefits
Structural
Ties
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Partner Relationship Marketing
Partners Inside the Firm
1. All employees customer
focused
2. Teams coordinate efforts
toward customers
Partners Outside the Firm
1. Supply chain management
2. Strategic alliances
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Customer Loyalty & Retention
• Customer Lifetime Value
– The entire stream of
purchases that the customer
would make over a lifetime of
patronage.
• Share of Customer
– The share a company
gets of the customers
purchasing in their
product categories.
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Customer Equity
• Customer equity
is the total
combined
customer lifetime
values of all of
the company’s
customers.
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Customer Relationship Groups
Butterflies
High
Good fit between
company’s offerings and
customer’s needs; high
profit potential
True Friends
Good fit between
company’s offerings and
customer’s needs; highest
profit potential
Profitability
Strangers
Low
Little fit between company’s
offerings and customer’s
needs; lowest profit
potential
Barnacles
Limited fit between
company’s offerings and
customer’s needs; low
profit potential
Short-term
customers
Long-term
customers
Projected loyalty
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The Internet
• The Internet has been hailed as the
technology behind a New Economy.
• Marketing applications include:
– “click-and-mortar” companies
– “click-only” companies
– Business-to-business e-commerce
• Business-to-business transactions online
are expected to reach $4.3 trillion in 2005.
• By 2005, 500,000 companies will use the
Internet to do business.
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New Marketing Landscape
Rapid Globalization
Not-for-Profit
Marketing
Ethics & Social
Responsibility
New World of Marketing
Relationships
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