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

2. 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)

3. What is Marketing?

4. 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

5. The Marketing Process

6. 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

7. Need or want?
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8. 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”

9. 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

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

11. Customer Dissatisfaction
Complaints

12. 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

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

14. 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?

15. What is the value proposition?
Sony = color
Volvo=safety

16. 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

17. 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

18. Societal Marketing Concept
Dove
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19. 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.

20. Outlook