Chapter 1 Marketing: Managing Profitable Customer Relationships

ROAD MAP: Previewing the Concepts Chapter 1 ROAD MAP: Previewing the Concepts What is marketing? Key steps in the marketing process. Consumers’ needs and wants. Five core marketplace concepts. Key elements of a customer-driven marketing strategy. Marketing management orientations that guide marketing strategy. Customer relationship management and strategies. Major trends and forces that are changing the marketing landscape in this new age of relationships. Professor Takada

What is Marketing? Marketing is an organizational function Chapter 1 What is Marketing? Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders. Professor Takada

What is Marketing Management? Chapter 1 What is Marketing Management? Marketing management is the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value. Professor Takada

Selling is only the tip of the iceberg Chapter 1 Selling is only the tip of the iceberg “There will always be need for some selling. But the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy. All that should be needed is to make the product or service available.” Peter Drucker Professor Takada

Designing the “Right” Product Chapter 1 Designing the “Right” Product Professor Takada

Only the best is good enough for Lexus customers Chapter 1 Only the best is good enough for Lexus customers Professor Takada

Key Customer Markets Consumer Markets Global Markets Business Markets Chapter 1 Key Customer Markets Consumer Markets Global Markets Business Markets Nonprofit/ Government Markets Professor Takada

ROAD MAP: What is marketing? Key steps in the marketing process. Chapter 1 ROAD MAP: What is marketing? Key steps in the marketing process. Consumers’ needs, wants, and demands. Five core marketplace concepts. Key elements of a customer-driven marketing strategy. Marketing management orientations that guide marketing strategy. Customer relationship management and strategies. Major trends and forces that are changing the marketing landscape in this new age of relationships. Professor Takada

A Simple Model of the Marketing Process Chapter 1 A Simple Model of the Marketing Process Create value for customers and build customer relationships Construct a marketing program that delivers superior value Understand the marketplace and customer needs and wants Design a customer-driven marketing strategy Capture value from customers in return Capture value from customers to create profits and customer equity Build profitable relationships and create customer delight Professor Takada

ROAD MAP: Previewing the Concepts Chapter 1 ROAD MAP: Previewing the Concepts What is marketing? Key steps in the marketing process. Consumers’ needs, wants, and demands. Five core marketplace concepts. Key elements of a customer-driven marketing strategy. Marketing management orientations that guide marketing strategy. Customer relationship management and strategies. Major trends and forces that are changing the marketing landscape in this new age of relationships. Professor Takada

Chapter 1 Needs - state of felt deprivation including physical, social, and individual needs. Types of Needs Physical: Food, clothing, shelter, safety Social: Belonging, affection Individual: Learning, knowledge, self-expression Wants - form that a human need takes, as shaped by culture and individual personality. Professor Takada

I want it, I need it… 5 Types of Needs Stated needs Real needs Chapter 1 I want it, I need it… 5 Types of Needs Stated needs Real needs Unstated needs Delight needs Secret needs Professor Takada

What is Marketed? Goods Services Events & Experiences Persons Chapter 1 What is Marketed? Goods Services Events & Experiences Persons Places & Properties Organizations Information Ideas Professor Takada

Chapter 1 Marketing Goods Professor Takada

Chapter 1 Marketing Ideas: Friends Don’t Let Friends Drive Drunk This is the watch Stephen Hollingshead, Jr. was wearing when he encountered a drunk driver. Time of death 6:55 p.m. Professor Takada

What Satisfies Consumers’ Needs and Wants? Chapter 1 What Satisfies Consumers’ Needs and Wants? Products Anything that can be Offered to a Market to Satisfy a Need or Want Persons Places Organizations Information Ideas The combination of tangible products, particular people, and certain activities in a particular place creates an experience (e.g., Disneyland) We are moving toward being a less manufacturing-based society and a more service-oriented society. Services Activity or Benefit Offered for Sale That is Essentially Intangible and Does Not Result in the Ownership of Anything Professor Takada

Chapter 1 Product as an Idea Products do not have to be physical objects. Here the “product” is an idea—protecting animals. Professor Takada

Chapter 1 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.” Professor Takada

Value and Satisfaction Chapter 1 Value and Satisfaction Expectation Performance 10 8 Expectation Performance 8 10 If performance is lower than expectations, satisfaction is low. If performance is higher than expectations, satisfaction is high. Professor Takada

A Simple Marketing System Chapter 1 A Simple Marketing System Professor Takada

Elements of a Modern Marketing System Chapter 1 Elements of a Modern Marketing System Professor Takada

Structure of Flows in a Modern Exchange Economy Chapter 1 Structure of Flows in a Modern Exchange Economy Professor Takada

Chapter 1 Marketing Management The art and science of choosing target markets and building profitable relationships with them. Questions to ask: What customers will we serve? What is our target market? How can we best serve these customers? What is our value proposition? Professor Takada

Segmentation and Target Marketing Chapter 1 Segmentation and Target Marketing #1 #2 Market Segmentation: Divide the market into segments of customers Target Marketing: Select the segment to cultivate Professor Takada

Marketing Management Demand Management Demarketing Chapter 1 Marketing Management Demand Management 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. Demarketing Professor Takada

ROAD MAP: What is marketing? Key steps in the marketing process. Chapter 1 ROAD MAP: What is marketing? Key steps in the marketing process. Consumers’ needs and wants. Five core marketplace concepts. Key elements of a customer-driven marketing strategy. Marketing management orientations that guide marketing strategy. Customer relationship management and strategies. Major trends and forces that are changing the marketing landscape in this new age of relationships. Professor Takada

Marketing Management Philosophies Chapter 1 Marketing Management Philosophies Customer-Driven Societal Marketing Concept Marketing Concept Selling Concept Product Concept Production Concept Professor Takada

Marketing and Sales Concepts Contrasted Chapter 1 Marketing and Sales Concepts Contrasted Professor Takada

Societal Marketing Concept Chapter 1 Societal Marketing Concept Professor Takada

Corporate Social Initiatives Chapter 1 Corporate Social Initiatives Professor Takada

Corporate Social Initiatives Chapter 1 Corporate Social Initiatives Professor Takada

Holistic Marketing Dimensions Chapter 1 Holistic Marketing Dimensions Professor Takada

ROAD MAP: What is marketing? Key steps in the marketing process. Chapter 1 ROAD MAP: What is marketing? Key steps in the marketing process. Consumers’ needs and wants. Five core marketplace concepts. Key elements of a customer-driven marketing strategy. Marketing management orientations that guide marketing strategy. Customer relationship management and strategies. Major trends and forces that are changing the marketing landscape in this new age of relationships. Professor Takada

The Marketing Mix Product Price Customer Needs Promotion Distribution Chapter 1 The Marketing Mix Customer Needs Product Price Promotion Distribution Professor Takada 1-9

Marketing-Mix Strategy Chapter 1 Marketing-Mix Strategy Professor Takada

Marketing Mix and the Customer Chapter 1 Marketing Mix and the Customer Four P’s Product Price Place Promotion Four C’s Customer solution Customer cost Convenience Communication Professor Takada

Factors Influencing Marketing Strategy Chapter 1 Factors Influencing Marketing Strategy Professor Takada

Marketing Management Tasks Chapter 1 Marketing Management Tasks Developing marketing strategies Capturing marketing insights Connecting with customers Building strong brands Shaping market offerings Delivering value Communicating value Creating long-term growth Professor Takada

ROAD MAP: What is marketing? Key steps in the marketing process. Chapter 1 ROAD MAP: What is marketing? Key steps in the marketing process. Consumers’ needs and wants. Five core marketplace concepts. Key elements of a customer-driven marketing strategy. Marketing management orientations that guide marketing strategy. Customer relationship management and strategies. Major trends and forces that are changing the marketing landscape in this new age of relationships. Professor Takada

Customer Relationship Management Chapter 1 Customer Relationship Management The process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. 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. Professor Takada

Customer Relationship Levels Chapter 1 Customer Relationship Levels Full Partnership Basic Relationship Continuum Professor Takada

Focus on Profitable Customers Chapter 1 Loyalty and Retention Social Benefits Financial Benefits Structural Ties Focus on Profitable Customers Professor Takada

Partner Relationship Marketing Chapter 1 Partner Relationship Marketing Partners Inside the Firm All employees customer focused Teams coordinate efforts toward customers Partners Outside the Firm Supply chain management Strategic alliances Professor Takada

Customer Loyalty & Retention Chapter 1 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. Customer Equity Customer equity is the total combined customer lifetime values of all the company’s customers. Professor Takada

Customer Relationship Groups Chapter 1 Customer Relationship Groups Butterflies True Friends Good fit between company’s offerings and customer’s needs; high profit potential Good fit between company’s offerings and customer’s needs; highest profit potential High Profitability Strangers Barnacles Little fit between company’s offerings and customer’s needs; lowest profit potential Limited fit between company’s offerings and customer’s needs; low profit potential Low Short-term customers Long-term customers Projected loyalty Professor Takada

ROAD MAP: What is marketing? Key steps in the marketing process. Chapter 1 ROAD MAP: What is marketing? Key steps in the marketing process. Consumers’ needs and wants. Five core marketplace concepts. Key elements of a customer-driven marketing strategy. Marketing management orientations that guide marketing strategy. Customer relationship management and strategies. Major trends and forces that are changing the marketing landscape in this new age of relationships. Professor Takada

Chapter 1 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. Professor Takada

New Marketing Landscape Chapter 1 New Marketing Landscape Rapid Globalization Not-for-Profit Marketing Ethics & Social Responsibility New World of Marketing Relationships Professor Takada

Chapter 1 Global Markets Coke is represented at the first China International Beverage Festival in Beijing in 2003 Professor Takada

The marketplace isn’t what it used to be… Chapter 1 The marketplace isn’t what it used to be… Changing technology Globalization Deregulation Privatization Empowerment Customization Convergence Disintermediation Professor Takada

Core Concepts Needs, wants, and demands Marketing channels Chapter 1 Core Concepts Needs, wants, and demands Target markets, positioning, segmentation Offerings and brands Value and satisfaction Marketing channels Supply chain Competition Marketing environment Marketing planning Professor Takada

Rest Stop: Reviewing the Concepts Chapter 1 Rest Stop: Reviewing the Concepts Define marketing and outline the steps in the marketing process. Explain the importance of understanding customers and the marketplace, and identify the five core marketplace concepts. Identify the key elements of a customer-driven marketing strategy and discuss marketing management orientations that guide marketing strategy. Discuss customer relationship management and strategies for building lasting customer relationships. Describe the major trends and forces that are changing the marketing landscape in this new age of relationships. Professor Takada