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Chapter One
Marketing: Managing Profitable
Customer Relationships
Roadmap: Previewing the Concepts
1. Define marketing and the marketing
process.
2. Explain the importance of understanding
customers and identify the five core
marketplace concepts.
3. Identify the elements of a customer-driven
marketing strategy and discuss the
marketing management orientations.
4. Discuss customer relationship management
and creating value for and capturing value
from customers.
5. Describe the major trends and forces
changing the marketing landscape.
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Case Study
NASCAR – What is its secret?
Creating Value
 NASCAR sells the
experience – in-car
cameras, wholesome
family orientation.
 NASCAR.com engages
fans via content.
 Success has been
achieved by creating
lasting customer
relationships.
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Capturing Value
 NASCAR is the 2nd
highest rated sport on TV.
 Fans are young, affluent,
and family oriented,
spending nearly $700
annually on NASCAR
merchandise.
 Fans are loyal to sport
and NASCAR fans are 3
times as likely to seek out
sponsors’ products than
are nonfans.
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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 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.
OLD View
of Marketing:
Making a Sale –
“Telling & Selling”
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NEW
New View
View
of
ofMarketing:
Marketing:
Satisfying
Satisfying
Customer
customerNeeds
needs
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The Marketing Process
 A simple model of the marketing process:
– 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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Needs, Wants, & Demands
 Need:
State of felt deprivation including
physical, social, and individual needs.
– Physical needs:
• Food, clothing, shelter, safety
– Social needs:
• Belonging, affection
– Individual needs:
• Learning, knowledge, self-expression
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Needs, Wants, & Demands
 Wants:
Form that a human need takes, as
shaped by culture and individual
personality.
 Wants + Buying Power = Demand
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Need / Want Fulfillment
 Needs and wants are 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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Need / Want Satisfiers
 Products:
– Persons
– Places
– Organizations
– Information
– Ideas
 Services
– Activity or benefit
offered for sale
that is essentially
intangible and
does not result in
ownership.
 Brand Experiences:
“. . . dazzle their senses, touch their hearts,
stimulate their minds.”
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Marketing Myopia
 Marketing myopia occurs when 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 & Satisfaction
 Care must be taken when setting
expectations:
– 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.
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 Transaction:
– A trade of
values between
two parties.
– One party gives
X to another
party and gets Y
in return. Can
include cash,
credit, or check.
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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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Modern Marketing Systems
 Main elements in a modern marketing
system include:
– Suppliers
– Company (marketer)
– Competitors
– Marketing intermediaries
– Final users
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Marketing Management
 The art and science of choosing target
markets and building profitable
relationships with them.
– Requires that consumers and the
marketplace be fully understood
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Marketing Management
 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
 Market Segmentation:
– Divide the market into segments of
customers
 Target Marketing:
– Select the segment to cultivate
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Marketing Management
 Demand
Management
– Finding and
increasing
demand, also
changing or
reducing
demand, as in
demarketing.
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 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.
– Value propositions dictate how firms will
differentiate and position their brands in
the marketplace.
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Marketing Management
Philosophies





Production Concept
Product Concept
Selling Concept
Marketing Concept
Societal Marketing Concept
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The Marketing Plan
 Transforms the marketing strategy into
action
 Includes the marketing mix and 4 P’s of
marketing:
– Product
– Price
– Place (Distribution)
– Promotion
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Customer Relationship Management
 The overall process of building and
maintaining profitable customer
relationships by delivering superior
customer value and satisfaction.
– Acquiring customers
– Keeping customers
– Growing customers
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Customer Perceived Value
 Customer’s evaluation of the difference
between all of the benefits and all of 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.
– Customer satisfaction often leads to
consumer loyalty.
– Some firms seek to DELIGHT customers
by exceeding expectations.
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Customer Relationships
 Loyalty and retention programs build
relationships and may feature:
– Financial Benefits
• EX: Frequency marketing programs
– Social Benefits
• EX: Club marketing programs
– Structural Ties
 Focus is on relating directly to
profitable customers, for the longterm.
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Partner Relationship Marketing
 Marketing partners help create customer
value and assist in building customer
relationships.
 Partners inside the firm:
– All employees customer focused
– Teams coordinate efforts toward customers
 Partners outside the firm:
– Supply chain management
– 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.
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 Share of
Customer
– The share a
company gets
of the customers
purchasing in
their product
categories.
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Customer Equity
 The combined discounted customer
lifetime values of all the company’s
current and potential customers.
– Classify customers by loyalty and
potential profitability
– Manage accordingly
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The New Digital Age
 Technology impacts the ways firms bring
value to their customers.
 Greater connectivity means greater access to
information, faster travel and communication.
 The Internet allows anytime, anywhere
connections between firms and customers.
– “Click-and-mortar” companies
– “Click-only” companies
– Business-to-business e-commerce
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New Marketing Landscape




Rapid Globalization
Ethics and Social Responsibility
Not-for-Profit Marketing
New World of Marketing Relationships
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Rest Stop: Reviewing the Concepts
1. Define marketing and the marketing
process.
2. Explain the importance of understanding
customers and identify the five core
marketplace concepts.
3. Identify the elements of a customer-driven
marketing strategy and discuss the
marketing management orientations.
4. Discuss customer relationship
management and creating value for and
capturing value from customers.
5. Describe the major trends and forces
changing the marketing landscape.
Prentice Hall, Inc. Copyright 2007
1-32