1. A Brief Introduction to Relationship Marketing Jeremy Kees, Ph.D.

2. CONSUMER

3. American Marketing Association’sAmerican 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.

4. What is Marketing all about? Marketing creates utility (value) through the exchange process 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

5. Type and Examples of Value –Utility: Want-satisfying power of a good or service Form utility ______ utility

6. Providing Consumers Utility: Blockbuster vs. Netflix (FORM, TIME, PLACE, OWNERSHIP) Blockbuster (traditional)?? Netflix (traditional)?? New Blockbuster –Tv spotTv spot New Netflix –Tv spotTv spot Emerging Competition??

7. How do we create customers? –Identifying customer needs –Designing goods and services that meet those needs –_________ ___________ 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

8. How do we create VALUE? Identify the needs in the marketplace Find out which needs the organization can profitably serve 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

9. “4 Eras” of Marketing

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

11. Transaction vs. Relationship Marketing

12. Bottom line… Relationship marketing goes beyond financial incentives and “good” customer service to truly distinguishing a firm from it’s competition.

13. Marketing Concept Based on Consumer Orientation –100% focus toward the consumer –Consumer drives company-wide decisions Focused on _________ success

14. The Value of Customer Retention On average, it costs over _____ ______ more to acquire a new customer versus retain an existing one A ______ gain in customer retention can result in an ______ gain in profits. (talk about assignment)

15. 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

16. Mini Case Study Due to the recession, Sprint has decided to get serious about cutting costs The VP of Marketing has made a tentative decision to “fire” 1200 current Sprint Customers who are “costing the company money” He plans on sending out the following letter

18. Mini Case Study You are part of the marketing task force to help the VP determine if this is the appropriate strategic decision to take with these “costly” customers Be sure to consider all stakeholders –e.g., Sprint employees, customers (profitable and unprofitable), shareholders, etc. Sprint Video

19. Tactically, firms must develop marketing strategies that will attract and retain consumers.

20. Marketing Strategy Marketing strategy: a firm’s overall program for selecting and satisfying a target market A marketing strategy is aimed at satisfying consumers in the selected target market through a careful balance of the elements of the marketing mix – each of which represents a subset of the overall marketing strategy 2 Key elements in marketing strategy –Target Market –Marketing Mix Variables

21. Successful Strategies: Tools and Techniques All marketing strategies have the goal of creating a sustainable competitive advantage for the firm

22. Target Market –Group of people toward whom the firm decides to direct its marketing efforts Toyota Anheuser Busch

23. Marketing Mix Variables Product Strategy Place (Logistics and Distribution) Strategy Promotional Strategy Pricing Strategy

24. Product Strategy More than just the product or service offered Deciding what goods or services to offer consumers Decisions concerning customer service, package design, brand names, trademarks and patents, warranties, product positioning, and new product development. One key decisions is: –First versus Second Mover Strategy

25. Distribution Strategy Ensures that consumers find their products in the proper quantities at the right times and places. Transportation modes. Warehousing. Inventory control. Order processing.

26. Promotional Strategy Blending together the various elements of promotion to communicate most effectively with the target market Informing, persuading, and influencing a consumer’s purchase decision. IMC

27. Pricing Strategy Deals with the methods of setting profitable and justifiable prices