Chapter 1 Marketing: Managing Profitable Customer Relationships Idil Yaveroglu Lecture Notes

What is Marketing? Marketing Defined: “Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.” (AMA 2007 definition)

What is Marketing?

Marketing is about managing profitable customer relationships Attracting new customers Retaining and growing current customers “There is only one boss. The customer. And he can fire everybody in the company, from the CEO down, simply by sending his money somewhere else” Sam Walton, founder of Walmart “The purpose of business is to create and keep a customer” Ted Levitt

The Marketing Process

Understanding the Marketplace Need State of felt deprivation Wants The form of needs as shaped by culture and the individual Demands Wants which are backed by buying power

Need or want? http://www.youtube.co m/watch?v=Wgl4hp_Q qMo&feature=player_e mbedded

Understanding the Marketplace Market Offering: Some combination of products, services, information, or experiences offered to satisfy a need or want. "People don't want to buy a quarter-inch drill. They want a quarter-inch hole!” Theodore Levitt Key is to “Sell the sizzle, not the steak”

Understanding the Marketplace Customer Value and Satisfaction Value Difference between all benefits and all costs of a marketing offer relative to those of competing offers Customers form expectations regarding value Marketers must deliver value to consumers Satisfaction Perceived performance relative to expectations A satisfied customer will buy again and tell others about their good experience

Dissatisfaction An unhappy customer will on average tell 13 people about his or her dissatisfaction

Customer Dissatisfaction Complaints http://www.saigon.com/nike/ http://www.ihatedell.net/ http://www.ihatestarbucks.com/

Understanding the Marketplace Exchanges and Relationships The act of obtaining a desired object from someone by offering something in return One exchange is not the goal, relationships with several exchanges are the goal Relationships are built through delivering value and satisfaction

Understanding the Marketplace Markets Set of actual and potential buyers of a product Marketers seek buyers that are profitable

Designing a Customer Driven Marketing Strategy Marketing management is the art and science of choosing target markets and building profitable relationships with them. Who is my target market? What is my value proposition?

What is the value proposition? Sony = color http://www.youtube.com/watch?v=2Bb8P7dfjVw Volvo=safety

Marketing Management Orientations Production Concept Focus is on production and distribution efficiency Product Concept Focus is on product improvement Selling Concept Focus is on selling and sales promotions Marketing Concept Focus is on understanding needs and wants of target customers Societal Marketing Concept Focus is on societal wellbeing

Production Orientation “If we build it they will come” Focus is on production process and making it more cost efficient Typical of Ford-T philosophy “You can have any color you want, as long as it’s black” Ford T Model

Societal Marketing Concept Dove http://www.youtube.c om/watch?v=gUsKIAp TewQ

Relationship Marketing The name of a strategy that entails forging long- term partnerships with customers, both individuals and firms. Key is delivering value and customer satisfaction Attracting a new customer may be TEN TIMES the cost of keeping an old customer CLV (Customer Lifetime Value): The value of the entire stream of purchases that a customer would make over a lifetime.

Outlook