Download Building Customer Relationships

Marketing
and Customer Value
Chapter 1
Marketing:
Creating and Capturing Customer Value
ZAPPOS
Zappos: A Passion for Creating Customer
Value and Relationships
Web retailer Zappos is flat out obsessed with creating customer satisfaction and
relationships. At Zappos, taking good care of customers starts with a deep-down,
customer-focused culture. The company’s number-one core value: Deliver WOW
through service! This WOW philosophy permeates the entire organization. The
Zappos Web site proclaims, “We are a service company that just happens to sell
[shoes, or handbags, or clothing, or, eventually, anything and everything].” In
fact, Zappos takes almost all the money that a company of its size would normally
spend on mass-media advertising and invests it directly into customer service.
Zappos hires only customer-oriented employees who fit the Zappos culture and
then trains them thoroughly in the art of building customer loyalty. In the words
of Zappos CEO Tony Hsieh (pronounced “shay”), “Our whole goal at Zappos is for
the Zappos brand to be about the very best customer service and customer
experience.” Zappos has become the poster child for this new age of customerfocused companies. The result? Zappos is growing astronomically. More than 75
percent of Zappos sales come from repeat customers. And despite a crippling
retail economy, sales have continued to soar in recent years.
Discussion Questions
• How has what we are seeing at this site
contributed to Zappos’ performance? Has
Zappos been successful? Why?
CHAPTER OVERVIEW
In this chapter, we introduce the basic concepts of marketing. It
starts with the question, “What is marketing”? Simply put,
marketing is managing profitable customer relationships. The
aim of marketing is to create value for customers and to
capture value from customers in return. Next, the five steps in
the marketing process are discussed—from understanding
customer needs, to designing customer-driven marketing
strategies and integrated marketing programs, to building
customer relationships and capturing value for the firm. Finally,
there is a discussion of the major trends and forces affecting
marketing in this age of customer relationships.
Creating and Capturing Customer
Value
Topic Outline
•
•
•
•
•
•
•
What Is Marketing?
Understand the Marketplace and Customer Needs
Designing a Customer-Driven Marketing Strategy
Preparing an Integrated Marketing Plan and Program
Building Customer Relationships
Capturing Value from Customers
The Changing Marketing Landscape
What Is Marketing?
Marketing is a process by which companies
create value for customers and build strong
customer relationships to capture value
from customers in return
What Is Marketing?
The Marketing Process:
I. Understanding the Marketplace
and Customer Needs
Customer Needs, Wants, and Demands
Needs
• States of deprivation
• Physical—food, clothing, warmth, safety
• Social—belonging and affection
• Individual—knowledge and self-expression
Wants
• Form that needs take as they are shaped by culture
and individual personality
Demands
• Wants backed by buying power
Understanding the Marketplace
and Customer Needs
• Market offerings are some
combination of products,
services, information, or
experiences offered to a
market to satisfy a need or
want
• Marketing myopia is
focusing only on existing
wants and losing sight of
underlying consumer
needs
Understanding the Marketplace
and Customer Needs
Customer Value and Satisfaction
Expectations
Customers
• Value and
satisfaction
Marketers
• Set the right level of
expectations
• Not too high or low
Understanding the Marketplace
and Customer Needs
Exchange is the act of obtaining a desired
object from someone by offering
something in return
Understanding the Marketplace
and Customer Needs
Markets are the set of actual and
potential buyers of a product
II. Designing a Customer-Driven
Marketing Strategy
Marketing management is the art and
science of choosing target markets and
building profitable relationships with them
– What customers will we serve?
– How can we best serve these customers?
Designing a Customer-Driven
Marketing Strategy
Selecting Customers to Serve
Market segmentation refers to dividing the
markets into segments of customers
Target marketing refers to which segments
to go after
Designing a Customer-Driven
Marketing Strategy
Choosing a Value Proposition
Value proposition
Set of benefits or
values a company
promises to deliver to
customers to satisfy
their needs
Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
Production
concept
Product
concept
Selling
concept
Marketing
concept
Societal
concept
Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
Production concept is the idea that
consumers will favor products that are
available or highly affordable
Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
Product concept is the idea that consumers
will favor products that offer the most
quality, performance, and features.
Organization should therefore devote its
energy to making continuous product
improvements.
Designing a Customer-Driven
Marketing Strategy
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
Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
Marketing concept is the
idea that achieving
organizational goals
depends on knowing the
needs and wants of the
target markets and
delivering the desired
satisfactions better than
competitors do
Designing a Customer-Driven
Marketing Strategy
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 longrun interests
Designing a Customer-Driven
Marketing Strategy
III. Preparing an Integrated
Marketing Plan and Program
The marketing mix: set of tools (four Ps) the
firm uses to implement its marketing
strategy. It includes product, price,
promotion, and place.
Integrated marketing program:
comprehensive plan that communicates
and delivers the intended value to chosen
customers.
IV. Building Customer
Relationships
Customer Relationship Management (CRM)
• The overall process of
building and maintaining
profitable customer
relationships by delivering
superior customer value
and satisfaction
1.1
Vipp Rubbish Bin
Building Customer Relationships
Relationship Building Blocks: Customer Value
and Satisfaction
Customerperceived value
Customer
satisfaction
• The difference
between total
customer value
and total
customer cost
• The extent to
which a
product’s
perceived
performance
matches a
buyer’s
expectations
Building Customer Relationships
Customer Relationship Levels and Tools
Basic
Relationships
Full
Partnerships
Basic Relationship sare often used by a
company with many low-margin customers .
For example, Procter & Gamble does not
phone or call on all of its Tide consumers
to get to know them personally. Instead,
P&G creates relationships through brandbuilding advertising, sales promotions, and
its Tide Fabric Care Network Web site
(www.Tide.com).
Full Partnerships are used in markets
with few customers and high margins,
sellers want to create full partnerships with
key customers. For example, P&G
customer teams work closely with Wal-Mart,
Safeway, and other large retailers.
Building Customer Relationships
The Changing Nature of Customer
Relationships
• Relating with more carefully selected
customers uses selective relationship
management to target fewer, more
profitable customers
• Relating more deeply and interactively by
incorporating more interactive two way
relationships through blogs, Websites,
online communities and social networks
Building Customer Relationships
The Changing Nature of Customer
Relationships
Customer-managed relationships
Marketing relationships in which
customers, empowered by today’s new
digital technologies, interact with
companies and with each other to shape
their relationships with brands.
Building Customer Relationships
Partner relationship management involves
working closely with partners in other
company departments and outside the
company to jointly bring greater value to
customers
Building Customer Relationships
Partner Relationship Management
• Partners inside the company is every
function area interacting with customers
– Electronically
– Cross-functional teams
• Partners outside the company is how
marketers connect with their suppliers,
channel partners, and competitors by
developing partnerships
Building Customer Relationships
Partner Relationship Management
• Supply chain is a channel that stretches
from raw materials to components to final
products to final buyers
• Supply chain management
V. Capturing Value from
Customers
Creating Customer Loyalty and Retention
• Customer lifetime value is the value of the
entire stream of purchases that the
customer would
make over a
lifetime of
patronage
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
Capturing Value from
Customers
Customer equity (客戶資產)
is the total combined
customer lifetime
values of all of the
company’s customers
Capturing Value from Customers
Building Customer Equity
• Right relationships with the right customers
involves treating customers as assets that
need to be managed and maximized
• Different types of customers require
different relationship management
strategies
VI. The Changing Marketing
Landscape
Uncertain Economic Environment
• New consumer frugality
• Marketers focus on value for the customer
Target focus changes to
the ‘pay less’ part of the
slogan, adjusting prices to
compete with WalMart.
1.2
An Era of Austerity
Discussion Questions (p. 35)
(Simple)
The Changing Marketing
Landscape
Digital Age
• People are connected continuously to
people and information worldwide
• Marketers have great new tools to
communicate with customers
• Internet + mobile communication devices
creates environment for online
marketing
The Changing Marketing
Landscape
• Rapid Globalization
• Sustainable Marketing
• Not-for-Profit Marketing
VII. What Is Marketing?
Pulling It All Together
Company Case: Pegasus Airlines
Pegasus Airlines: Delighting a New
Type of Traveling Customer
Pegasus Airlines is a relative newcomer to the up and coming Turkish flight market.
Operating out of a secondary airport near Istanbul may have appeared to be a
distinct disadvantage, but the airline has turned this to its advantage by surpassing
average on-time departure times. In addition to this, the airline has sought to
differentiate itself from the conventional airlines by adopting many of the features of
budget airlines operating throughout Europe. By positioning themselves as a lowcost carrier, the airline has been able to achieve sustained growth even in times of
economic uncertainty. The primary focus of the airline is customer service, by putting
this aspect of their operations front and center, they have avoided many of the
difficulties that other airlines have faced with dropping passenger numbers. By
running a series of incentive schemes, linked to improved and sustained high
customer service levels, Pegasus has a strong relationship with its customers. The
airline has also made extensive use of social networking sites, rewarding customers
for participation and feedback. By combining low fare with excellent customer
service, Pegasus has shown that it can generate steady profits. In ensuring that it
caters for the exact needs of customers it has become a powerful player in the
emerging Turkish airline market.
Discussion Questions
1. Give examples of needs, wants, and demands that
Pegasus customers demonstrate, differentiating these
three concepts. What are the implications of each for
Pegasus’s practices?
2. Describe in detail all the facets of Pegasus’s product.
What is being exchanged in a Pegasus transaction?
3. Which of the five marketing management concepts best
applies to Pegasus?
4. What value does Pegasus create for its customers?
5. Is Pegasus likely to continue being successful in building
customer relationships? Why or why not?