Marketing: Managing Profitable Customer Relationships Chapter 1

Objectives Be able to define marketing and discuss its core concepts. Be able to define marketing management and compare the five marketing management orientations.

Objectives Understand customer relationship management and strategies. Realize the major challenges facing marketers in the new “connected” millennium.

Amazon Strong sales, no profits Customer-driven to its core Each customer’s experience is unique Provides great selection, good value, discovery as well as convenience A true online community

What is Marketing? Marketing is managing profitable customer relationships Attracting new customers Retaining and growing current customers “Marketing” is NOT synonymous with “sales” or “advertising”

What is Marketing? Kotler’s social definition: “Marketing is 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.”

What is being marketed in this ad? What Can Be Marketed? Goods Services Places Ideas Events Persons Properties Organizations Information Experiences What is being marketed in this ad?

Core Marketing Concepts Figure 1-1: Core Marketing Concepts

Discussion Question Resellers are a primary market for Nike’s products. Describe the exchange process between Nike and resellers. Think beyond the obvious.

Elements of a Modern Marketing System Figure 1-2: Elements of a Modern Marketing System

Marketing Management Marketing management is “the art and science of choosing target markets and building profitable relationships with them.” Creating, delivering and communicating superior customer value is key.

Marketing Management Customer Management: Demand Management: Marketers select customers that can be served well and profitably. Demand Management: Marketers must deal with different demand states, ranging from no demand to too much demand.

Marketing Management Demarketing: Commuter Connections promotes the use of mass transit and carpooling as an alternative to driving alone. Clicking the WWW icon will open your web browser and link to the web site pictured in the screen shot. Commuter Connections

Management Orientations Societal Marketing Concept Marketing Management Management Orientations Production Concept Product Concept Selling Concept Marketing Concept Societal Marketing Concept

The Selling and Marketing Concepts Contrasted Figure 1-3: The Selling and Marketing Concepts Contrasted

Considerations Underlying the Societal Marketing Concept Figure 1-4: Considerations Underlying the Societal Marketing Concept

Relationship Between Customer Satisfaction and Loyalty Figure 1-5: Relationship Between Customer Satisfaction and Loyalty

CRM Customer relationship management (also called CRM) is defined as: “the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.”

CRM It costs 5 to 10 times MORE to attract a new customer than it does to keep a current customer satisfied. Marketers must be concerned with the lifetime value of the customer.

BusinessNow SatMetrix Video Clip View what the experts have to say about customer loyalty and the bottom line. Click the picture above to play video

CRM Key Concepts Attracting, retaining and growing customers Customer value and satisfaction Perceptions are key Created by meeting/ exceeding expectations Loyalty and retention Many benefits of loyalty Increases as satisfaction levels increase Delighting consumers should be the goal Growing customer share Cross-selling Key Concepts Attracting, retaining and growing customers Building relationships and customer equity

CRM Key Concepts Customer equity Total combined customer lifetime values of all customers Measures firm’s performance, but in a manner that looks to the future Attracting, retaining and growing customers Building relationships and customer equity

CRM Key Concepts Customer relationship levels and tools Target market typically dictates type of relationship Basic relationships Full relationships Customer loyalty and retention programs Adding financial benefits Adding social benefits Adding structural ties Key Concepts Attracting, retaining and growing customers Building relationships and customer equity

Marketing Challenges Technological advances, rapid globalization, and continuing social and economic shifts are causing marketplace changes. Major marketing developments can be grouped under the theme of Connecting.

Today’s Marketing Connections Figure 1-6: Today’s Marketing Connections

Marketing Challenges Connecting Via technology With customers Advances in computers, telecommunications, video-conferencing, etc. are major forces Databases allow for customization of products, messages and analysis of needs The Internet Facilitates anytime, anywhere connections Facilitates CRM Creates marketspaces Via technology With customers With marketing partners With the world

Marketing Challenges Connecting Via technology With customers Selective relationship management is key Customer profitability analysis separates winners from losers Growing “share of customer” Cross-selling and up-selling are helpful Direct sales to buyers are growing Via technology With customers With marketing partners With the world

Marketing Challenges Connecting Via technology With customers Partner relationship management involves: Connecting inside the company Connecting with outside partners Supply chain management Strategic alliances Via technology With customers With marketing partners With the world

Marketing Challenges Connecting Via technology With customers Globalization Competition New opportunities Greater concern for environmental and social responsibility Increased marketing by nonprofit and public-sector entities Social marketing campaigns Via technology With customers With marketing partners With the world

Connecting with Values . . . The Body Shop Visit the “Our Values” and “About Us” sections of The Body Shop’s web site. How might the values espoused by the company influence the manner in which the Body Shop . . . Chooses their strategic partners? Advertises fragrances to consumers? Develops new products? How might these decisions in turn impact “the bottom line”? The Body Shop

Reconnecting with Teens Modernizing the Girl Scouts The Problem: Campfires and cookies weren’t cutting it with today’s teens. Scouting was perceived as NOT cool and primarily for younger kids. The Girl Scout Council of Cumberland Valley’s effort to change the image of scouting among teens is depicted in, “The Buntin Group gives Girls Scouts a cooler image,” ADWEEK Southwest, Sept. 9, 2002, v24 i36, p 4(1). The campaign ran regionally in a tri-state area. See also, “Girl Power,” ADWEEK Western Edition, August 21, 200, v50 i24, p5 for a short description of an earlier campaign undertaken in California and Nevada. An interesting article by Catharine P. Taylor entitled, “Diversity: Girl Scouts extend multicultural reach; All American group seeks greater diversity,” can be read in the Jan. 28, 2002 issue of Advertising Age, (v73, p. 18).

Modernizing the Girl Scouts The Solution Goal: Adapt the curriculum to the needs of teens Changed the “Product”: Added activities related to technology and adventure sports: rock-climbing, surfing, martial arts Goal: Promote a cooler image for the Girl Scouts Campaign Theme: “Join Troop 2002” Target Market: Diverse -- Girls of all ages and all races

Modernizing the Girl Scouts The Solution TV Ad Execution: Japanimation style visuals and throbbing electronica music were used to make scouting seem “hip”. Taglines: “Campfire songs, the remix”; “Be part of a girl band”. TV Vehicles: MTV, VH1, Animal Planet, Nickelodeon (in TN, KY, and AL regions). Other Media Used: Stylized posters sent to schools, churches, community centers; interactive media.