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Lecture-3 MGT301 Principles of Marketing
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Summary of Lecture-2
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Road Map Road Map Understanding Marketing and Marketing Process Understanding Marketing and Marketing Process Core Marketing Concepts Core Marketing Concepts
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Core Marketing Concepts
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Needs Markets Transactions Wants Demands Exchange Products
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Today’s Topics
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Marketing Functions Marketing Functions Customer Relationship Management Customer Relationship Management
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Marketing Functions
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Costs and Functions of Marketing On the average, 50% of all product costs can be traced directly to marketing What does the customer receive in exchange for the 50% marketing costs?
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Universal Marketing Functions Information Buying Risk Taking Selling Financing Transporting Standardizing and Grading Storing Marketing Functions
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Eight Universal Marketing Functions 1. Buying 2. Selling 3. Transporting 4. Storing 5. Standardizing and grading 6. Financing 7. Risk Taking 8. Securing Marketing Information
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Marketing Management Marketing management is “the art and science of choosing target markets and building profitable relationships with them.” 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. Creating, delivering and communicating superior customer value is key.
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Demarketing …Marketing to reduce demand temporarily or permanently; the aim is not to destroy demand but only to reduce or shift it. …Marketing to reduce demand temporarily or permanently; the aim is not to destroy demand but only to reduce or shift it.
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Relationship Marketing The process of establishing and maintaining mutually beneficial exchange relationships with customer and other stakeholders Two components: Customer Focus Competitive Advantage
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Change In Perspective Yesterday: Here is this great product. Don’t you want to buy it? Today: Here is what I need. Can you make it?
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Direct Marketing Channels Ways to market to your customers on a one-to-one basis –Face-to-face channels –Direct Mail –Catalog –Telemarketing –On-line marketing
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Customer Focused Marketing Basic Philosophy: –It is more profitable to keep loyal customers than to constantly be attracting new ones
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Lifetime Value of a Customer..the revenues and intangible benefits (referrals, customer feedback, etc.) that a customer brings to the seller over an average lifetime in the category, less the amount the company must spend to acquire, market to, and service the customer.
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Customer Focused Marketing How do I go about increasing the average lifetime value of my customers? 1. Identify your most valuable customers 2. Build a learning relationships with them so you can… 3. Provide a sustainable advantage over your competition (Create Value )
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Customer Relationship Management
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CRM CRM – Customer relationship management... “is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.” …the new view is that marketing is the science and art of finding, retaining, and growing profitable customers.
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CRM It costs 5 to 10 times MORE to attract a new customer than it does to keep a current customer satisfied. 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. Marketers must be concerned with the lifetime value of the customer. Relationship building blocks: Customer value and Satisfaction Relationship building blocks: Customer value and Satisfaction
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What is CRM? Strategies focused on increasing customer satisfaction, loyalty, and profitability by leveraging superior customer knowledge acquired, stored, and acted upon with the aid of information technology Strategies focused on increasing customer satisfaction, loyalty, and profitability by leveraging superior customer knowledge acquired, stored, and acted upon with the aid of information technology
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What are the goals of CRM?
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The idea of CRM is that it helps businesses use technology to gain insight into the behavior of customers and the value of those customers. If it works as hoped, a business can: The idea of CRM is that it helps businesses use technology to gain insight into the behavior of customers and the value of those customers. If it works as hoped, a business can: Provide better customer service Provide better customer service Make call centers more efficient Make call centers more efficient Help sales staff close deals faster Help sales staff close deals faster Simplify marketing and sales processes Simplify marketing and sales processes Discover new customers Discover new customers
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Value of Loyalty Firms have realized the value of customer retention -- Firms have realized the value of customer retention -- Facts: Facts: Winning a new customer is usually 5- 10 times more costly than retaining an existing customer Winning a new customer is usually 5- 10 times more costly than retaining an existing customer Customers are usually more profitable the longer you keep them. Customers are usually more profitable the longer you keep them. Why? Why?
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The Value of Loyalty Goes Beyond Single Customers
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Loyal customers provide more and more credible referrals But the angry gossip of disloyal customers can devastate a firm!
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The Bottom Line A 5% decrease in churn (customer turnover) can increase profits immensely (25-95%) It is clear that developing and retaining customer relationships is a key to competitive success and profitability!
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Let’s stop it here
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Summary
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Universal Marketing Functions Information Buying Risk Taking Selling Financing Transporting Standardizing and Grading Storing Marketing Functions
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Demarketing …Marketing to reduce demand temporarily or permanently; the aim is not to destroy demand but only to reduce or shift it.
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Customer Relationship Management
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Loyal customers provide more and more credible referrals But the angry gossip of disloyal customers can devastate a firm!
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Customer Relationship Management (CRM) Using information about customers to create marketing strategies that develop and sustain desirable customer relationships Identifying buying-behavior patterns of customers Using behavioral information to focus on the most profitable customers
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Next…. Marketing in Historical perspective and Evolution of Marketing
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Lecture-3 MGT301 Principles of Marketing
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