Marketing: Managing Profitable Customer Relationships

Topic & Structure of the lesson

What is Marketing? Core Marketing Concepts Marketing management philosophies / concepts The selling and marketing concepts contrasted Marketing challenges of the new century

Learning Outcomes
At the end of the lesson, you should be able to:
Identify and explain the core concepts in marketing Identify and explain the marketing management philosophies Explain the challenges faced by marketers in the new century

Main Teaching Points

Marketing Concepts Marketing Management Philosophies Marketing Challenges

What is Marketing?
Definition: 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. Not telling and selling but satisfying customer needs

The Marketing Process

Five-step model of the marketing process
1. Understand the marketplace and customer needs and wants 2. Design a customer-driven marketing strategy 3. Construct a marketing program that delivers superior value 4. Build profitable relationships and create customer delight 5. Capture value from customers to create profits and customer quality

Core Marketing Concepts

Needs, wants & demand

Markets

Core Marketing Concepts

Marketing offers (products and services)

Exchange, transaction & relationships

Value and satisfaction

Core Marketing Concepts

1. Needs states of felt deprivation 2. Wants the form taken by human needs as they are shaped by culture and individual personality 3. Demands human wants that are backed by buying power

Core Marketing Concepts (cont.)

4. Product anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need -Products not limited to physical products -Also includes services, activities, benefitsintangibles that do not result in ownership of anything -Many marketers suffer from marketing myopia

Core Marketing Concepts (cont.)

5. Value the difference between the values the customer gains from owning and using a product and the costs of obtaining the product 6. Satisfaction the extent to which a products perceived performance matches a buyers expectations. -Marketers must be careful to set up the right level of expectations

Core Marketing Concepts (cont.)

7. Quality / Total Quality Management programmes designed to constantly improve the quality of products, services, and marketing processes 8. Exchange the act of obtaining a desired object from someone by offering something in return -Idea is to build and maintain desirable exchange relationships -Retain customers through superior customer value

Core Marketing Concepts (cont.)

9. Transaction a trade between two parties that involves at least two things of value, agreed upon conditions, a time of agreement and a place of agreement

Core Marketing Concepts (cont.)

10. Relationship marketing the process of creating, maintaining and enhancing strong, value laden relationships with customers and other stakeholders 11. Market the set of all actual and potential buyers of a product or service -These buyers share a particular need or want that can be satisfied through exchange relationships

Designing a Customer-Driven Marketing Strategy

Marketing Management is the art and science of choosing target markets and building profitable relationships with them Two important questions
1. What customers will we serve (whats our target market?) 2. How can we serve these customers best (whats our value proposition?)

Selecting Customers to Serve

Dividing the market into segments of customers (market segmentation) Selecting which segment to serve (target marketing) Marketing mangers must understand that it is not possible to serve all customers

Choosing a Value Proposition

A companys value proposition is the set of benefits or values it promises to deliver to customers to satisfy their needs
They answer the customers question:

Why should I buy your brand rather than a competitors?

It answers the question:

How the company will differentiate and position itself in the marketplace

Marketing Management Orientations

1. The production concept holds that consumers will favour products that are available and highly affordable Therefore management should focus on improving production and distribution efficiency Useful in two types of situations
1. Demand for the product exceeds the supply 2. Products cost is too high and improved productivity is required to bring it down

Risk of Marketing Myopia

Marketing Management Orientations

2. Product concept holds that consumers will favour products that offer the most quality, performance and innovative features Therefore management should devote energy to making continuous product improvements Risk of Marketing Myopia

Marketing Management Orientations

3. The selling concept holds that consumers will not buy enough of the organisations products unless it undertakes a large scale selling and promotion offer. 4. The marketing concept holds that achieving organisational goals depends on determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors do.

The selling and marketing concepts contrasted

Selling concept Marketing concept

Starting point Focus

Means Ends

Factory
Existing products Selling and promoting Profits through sales volume

Market
Customer needs Integrated marketing Profits through cust. satisfaction

Marketing Management Orientations

5. The societal marketing concept holds that the organisation should determine the needs, wants and interests of target markets. It should then deliver superior value to customers in a way that maintains or improves the customers and the societys well being.

Marketing challenges of the new century

Growth of non-profit marketing Rapid globalisation The changing world economy The call for more ethics and social responsibility 5. The new marketing landscape

1. 2. 3. 4.