A Brief Introduction to Marketing and Customer Relationship Building Jeremy Kees, Ph.D.

Who is Jeremy Kees??

CONSUMER

American Marketing Association’s new official definition of marketing released August 2007: 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.

Kotler & Keller’s definition of marketing management: The art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value.

Value, Value, Value Successful products and services deliver value and satisfaction to customers We make buying decisions based on which product is perceived to offer the most value Tangible/Intangible benefits vs. cost

How do we create customers? Identifying customer needs Designing goods and services that meet those needs Communicate Information about those goods and services to prospective buyers Making the goods or services available at times and places that meet customers’ needs Pricing goods and services to reflect costs, competition, and customers’ ability to buy Providing for the necessary service and follow-up

How do we create VALUE? Identify the needs in the marketplace Find out which needs the organization can profitably serve Design goods and services that meet those needs Developing a marketing mix that will convert potential customers into actual customers Providing for the necessary service and follow-up after the service

“4 Eras” of Marketing

From transaction-based marketing to relationship marketing… Transaction–based marketing (Simple exchanges) Relationship marketing Lifetime value of a customer Converting new customers to advocates

From transaction-based marketing to relationship marketing…

Transaction vs. Relationship Marketing

Three Levels of Relationship Marketing Characteristic Level 1 Level 2 Level 3 Primary bond Financial Social Structural Degree of customization Low Medium Medium to high Potential for sustained competitive advantage Moderate High

Let’s take a step back… Although it is very important to try to build relationships with customers to ensure LT success But, it is just as important to determine which consumers we want this relationship with!! Target Market “Costly” Consumers Sprint Video

Customer Relationship Management (CRM) The combination of strategies and tools that drive relationship programs, re-orientating the entire organization to a concentrated focus on satisfying customers

Strategies for Building Customer Relationships Affinity Programs a marketing effort sponsored by an organization that solicits responses from individuals who share common interests and activities BOA

Strategies for Building Customer Relationships Frequency Marketing frequent-buyer or user marketing programs that reward customers with cash, rebates, merchandise, or other premiums Examples?? Thankyou Rewards Spot But not just for hotels and airlines…

Strategies for Building Customer Relationships Database Marketing software that analyzes marketing information, then identifies and targets messages toward specific groups of potential customers http://www.wyndham.com

Strategies for Building B2B Relationships Strategic alliance a partnership formed to create a competitive advantage These more formal long-term partnership arrangements improved each partner supply-chain relationships and enhance flexibility Wal-Mart!

Strategies for Building B2B Relationships Electronic Data Interchange (EDI) involves computer-to-computer exchanges of invoices, orders, and other business documents Vendor Managed Inventory (VMI) is an inventory-management system in which the seller–based on existing agreement with a buyer– determines how much of a product is needed

Strategies for Building B2B Relationships Database Marketing software that analyzes marketing information, then identifies and targets messages toward specific groups of potential customers

Evaluating Relationships Lifetime Value (LTV) Refers to the net present value of the potential revenue stream for any particular customer over a # of years Starts with current purchase activity then extrapolates to include potential additions from cross-selling, upgrades, total ownership, etc.

Marketing Concept Based on Consumer Orientation 100% focus toward the consumer Consumer drives company-wide decisions Focused on LONG TERM success

Building Buyer-Seller Relationships Many customers are seeking ways to simplify their lives, and relationships provide a way to do this Customers find comfort with brands that have become familiar through their ongoing relationships with companies or when they feel like they can relate to a company Dove’s Campaign for REAL Beauty Evolution Such relationships often lead to more efficient decision-making my customers and higher levels of customer satisfaction

The Value of Customer Retention On average, it costs over 10 TIMES more to acquire a new customer versus retain an existing one A 5% gain in customer retention can result in an 80% gain in profits.