1. Chapter 1 Marketing: Managing Profitable Customer Relationships

2. ROAD MAP: Previewing the Concepts
Chapter 1
ROAD MAP: Previewing 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 the 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.

3. Chapter 1
What Is Marketing?
Simple Definition: Marketing is managing profitable customer relationships.
Goals:
Attract new customers by promising superior value.
Keep and grow current customers by delivering satisfaction.

4. Marketing Old vs. New Old view of marketing:
Chapter 1
Marketing Old vs. New
Old view of marketing:
Making a sale -- “Telling and Selling”
New view of marketing:
Satisfying customer needs

5. Chapter 1
Marketing Defined
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.

6. 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

7. What are Consumers’ Needs, Wants, and Demands?
Chapter 1
What are Consumers’ Needs, Wants, and Demands?

8. Chapter 1
This Is a Need
Needs - state of felt deprivation including physical, social, and individual needs.

9. Types of Needs Physical: Social: Individual:
Chapter 1
Types of Needs
Physical:
Food, clothing, shelter, safety
Social:
Belonging, affection
Individual:
Learning, knowledge, self-expression

10. Chapter 1
This Is a Want
Wants - form that a human need takes, as shaped by culture and individual personality.

11. Chapter 1
This Is Demand
Wants
Buying Power
“Demand”

12. Need / Want Fulfillment
Chapter 1
Need / Want Fulfillment
Needs and Wants Fulfilled through a Marketing Offer :
Some combination of products, services, information, or experiences offered to a market to satisfy a need or want.

13. 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

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

15. 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.”

16. 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.

17. Exchange vs. Transaction
Chapter 1
Exchange vs. Transaction
Exchange:
Act of obtaining a desired object from someone by offering something in return.
Transaction:
A trade of values between two parties.
One party gives X to another party and gets Y in return. Can include cash, credit, check, or barter.

18. What is a Market? The set of actual and potential buyers of a product.
Chapter 1
What is a Market?
The set of actual and potential buyers of a product.
These people share a need or want that can be satisfied through exchange relationships.

19. Elements of a Modern Marketing System
Chapter 1
Elements of a Modern Marketing System

20. 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?

21. 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

22. 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

23. It cleans and freshens like sunshine!
Chapter 1
Value Proposition
The set of benefits or values a company promises to deliver to consumers to satisfy their needs.
It cleans and freshens like sunshine!

24. Marketing Management Philosophies
Chapter 1
Marketing Management Philosophies
Customer-Driven
Societal Marketing Concept
Marketing Concept
Selling Concept
Product Concept
Production Concept

25. Marketing and Sales Concepts Contrasted
Chapter 1
Marketing and Sales Concepts Contrasted

26. Customer-Driven Marketing
Chapter 1
Customer-Driven Marketing
How many of us would have thought to ask for a “wearable” PC? Marketers must often understand customer needs even better than customers themselves do.

27. The Marketing Mix Product Price Customer Needs Promotion Distribution
Chapter 1
The Marketing Mix
Customer
Needs
Product
Price
Promotion
Distribution
1-9

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

29. Customer Perceived Value
Chapter 1
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.

30. Customer Perceived Value
Chapter 1
Customer Perceived Value
Is FedEx’s service worth the higher price? FedEx thinks so. It promises reliability, speed, and peace of mind. FedEx ads say “Need to get it there or else? Don’t worry. There’s a FedEx for that.”

31. Customer Satisfaction
Chapter 1
Customer Satisfaction
Dependent on the product’s perceived performance relative to a buyer’s expectations.

32. Customer Relationship Levels
Chapter 1
Customer Relationship Levels
Full Partnership
Basic Relationship
Continuum

33. Focus on Profitable Customers
Chapter 1
Loyalty and Retention
Social Benefits
Financial Benefits
Structural Ties
Focus on Profitable Customers

34. 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

35. 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.

36. Customer Lifetime Value
Chapter 1
Customer Lifetime Value
To keep customers coming back, Stew Leonard’s has created the “Disneyland of dairy stores.” Rule #1—the customer is always right. Rule #2—if the customer is ever wrong, reread Rule #1.

37. Chapter 1
Customer Equity
Customer equity is the total combined customer lifetime values of all the company’s customers.

38. 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

39. 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.

40. Chapter 1
The New Digital Age
The recent technology boom has had a major impact on the ways marketers connect with and bring value to their customers.

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

42. 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.

43. Q: Your marketing campaigns appeal to your customers' desire to be perceived as owning the best in bicycle technology. Your marketing campaigns successfully appeal to consumers':
1. needs.
2. wants.
3. satisfactions.
4. demands.
AK, 7e – Chapter 1

44. Q: Your company is also successful because you offer free maintenance and repair for the first two years after the purchase of a bicycle. Therefore, along with the physical product, you offer an attractive package of:
1. values.
2. ideas.
3. events.
4. services.
AK, 7e – Chapter 1

45. Q: As a campaign manager for a candidate to your county's legislature, you are defining the candidate’s positioning among voters and are working on a pre-election rally during which your candidate and several prominent supporters will deliver speeches. You are planning a:
1. product.
2. service.
3. satisfaction.
4. promotional campaign
AK, 7e – Chapter 1

46. Q: Your firm has perfected a process that reduces the overall cost of producing custom-made bikes. As a result, you adopt the ________ concept of marketing, whereby you offer your products to consumers at prices well below those of your competitors.
1. production
2. product
3. marketing
4. societal marketing
AK, 7e – Chapter 1

47. Q: You favor a marketing approach that emphasizes the quality and new features of your bicycles, yet your assistant prefers an approach that emphasizes innovative promotion strategies. Which of the two following marketing concepts are exhibited here?
1. Marketing and selling
2. Production and societal marketing
3. Product and marketing
4. Product and selling
AK, 7e – Chapter 1

48. Q: To reduce the large capacity of bikes in your warehouse, you adopt the _________ concept and attempt to push your products into the market through heavy advertising.
1. production
2. product
3. selling
4. marketing
AK, 7e – Chapter 1

49. Q: In anticipation of high demand, you build a factory in Mexico, where you can save on labor and production costs. However, you still provide benefits to the Mexican workers comparable to those many American workers receive, illustrating that you have successfully practiced the:
1. marketing concept.
2. product concept.
3. societal marketing concept.
4. selling concept.
AK, 7e – Chapter 1

50. Q: Are you more inclined to buy from a company that is socially responsible?
1. Yes
2. No
AK, 7e – Chapter 1

51. Q: Would you be willing to pay more for a product because it was from a socially-responsible company?
Yes No
AK, 7e – Chapter 1

52. Q: The most important new technology for connecting is:
1. the Internet.
2. the database.
3. the laptop computer.
4. the fiber optic telephone.
AK, 7e – Chapter 1