Chapter 1 Marketing
Customer relationship groups
1. Strangers 2. Butterflies 3. True friends 4. Barnacles The goal is to the RIGHT relationship with the RIGHT customers
Marketing process
1. Understand the marketplace (needs and wants) 2. Create a value-driven marketing strategy 3. Form a marketing program 4. Build and maintain profitable customer relationships
Marketing mix tools
4 ps Product Price Place Promotion
Needs
States of felt deprivation Physical- basic food, water, clothing, warmth, safety Social- belonging and affection Self- Knowledge and self expression Not created by marketers
Relationship management strategy for strangers
Strangers show least potential profitability and loyalty Hence the company does not invest in them, and instead make revenue on each transaction
Production concept
- Concept according to which the customers want available and highly affordable products, therefore the company should improve their production and distribution efficiency - May cause marketing myopia - Eg: Lenovo products for price sensitive Chinese market
Selling concept
- The idea that the consumers will only buy the product if the company undertakes a large-scale promotion and selling effort - Focuses on selling what the company makes and not what the market WANTS. - Risky as it focuses on selling the product rather than creating customer value and building strong customer relationship
Product concept
- according to which people favor products that have better quality, performance and innovative features, therefore the company should focus on making continuous product improvements - However focusing only on the product may cause marketing myopia - Eg: better quality mouse trap, but people may want better quality chemical sprays, not mouse trap
Customer relationship levels and tools
1. Basic relationship: Low-margin customers 2. Full partnership: High-margin customers 3. Frequency marketing program: loyal or frequent purchasers
5 core marketplace concepts
1. Customer needs, wants and demands 2. Market offerings 3.Customer value and satisfaction 4. Exchange and relationships 5. Market
marketing management orientations that guide marketing strategies
1. Production concept 2. Product concept 3. Selling concept 4. Marketing concept 5. Societal marketing concept
To design a good marketing strategy
1. Segmentation and targeting (which customer to serve?) 2. Value proposition
Value proposition
A set of benefits or values that the company promises the product or service will have in order to satisfy the customers needs
Marketing mix
A set of marketing tools that work together in order to engage customers, satisfy customer needs and build strong customer relationships
Marketing channel
Consists of distributors, retailers and others that connect the company to its buyers
Value and satisfaction
Customers set an expectation on the value and satisfaction that the marketers claim that the product will bring about, and buy accordingly Marketers need to take care of the level of expectations: - if they set it too LOW then they will satisfy not enough customers - if they set it too HIGH then they will disappoint the customers Customer value and satisfaction is IMP. in building strong customer relationships
Major environmental forces
Demographics Economy Natural Technological Political Cultural/social
Marketing offerings
It includes products, services, information and experiences that are offered to satisfy consumer needs and wants Can be intangible such as airlines, trains, banks etc.
Marketing
It is defined as the process by which companies create value and build strong customer relationships in order to capture value from the customers in return
Customer engagement marketing
Making the brand a meaningful part of customers lives and daily conversations by fostering continuous customer involvement in shaping the brand conversations, experiences and community the internet and social media platform has given a great boost for this marketing The key to engagement marketing is to enter the customers conversations through engaging and meaningful brand messages
Define marketing and outline the steps in the marketing process.
Marketing is the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return. The marketing process involves five steps. The first four steps create value for customers. First, marketers need to understand the marketplace and customer needs and wants. Next, marketers design a customerdriven marketing strategy with the goal of getting, keeping, and growing target customers. In the third step, marketers construct a marketing program that actually delivers superior value. All of these steps form the basis for the fourth step, building profitable customer relationships and creating customer delight. In the final step, the company reaps the rewards of strong customer relationships by capturing value from customers.
Relationship management strategy for true friends
Most profitable and loyal Continuous relationship investment
Explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts
Outstanding marketing companies go to great lengths to learn about and understand their customers' needs, wants, and demands. This understanding helps them to design want-satisfying market offerings and build value-laden customer relationships by which they can capture customer lifetime value and greater share of customer. The result is increased long-term customer equity for the firm. The core marketplace concepts are needs, wants, and demands; market offerings (products, services, and experiences); value and satisfaction; exchange and relationships; and markets. Wants are the form taken by human needs when shaped by culture and individual personality. When backed by buying power, wants become demands. Companies address needs by putting forth a value proposition, a set of benefits that they promise to consumers to satisfy their needs. The value proposition is fulfilled through a market offering, which delivers customer value and satisfaction, resulting in long-term exchange relationships with customers.
Share of customers
Portion of the customers purchasing that the company gets in its product categories Eg: Amazon has a great variety of products so that it can give its customers every option to buy. Recommending products that they may have in their search history
Relationship management strategy for butterflies
Potentially profitable but not loyal Create satisfying and profitable transactions, capturing as much business as possible for the time period and stop investing until next transaction
Mobile marketing
Reaching out, stimulating immediate purchases and engaging with customers via their mobile devices to sell, promote and engage with their customers Online shopping
Perceived customer value
The evaluation by a customer on the differences between all the benefits and all the costs that the marketing offering has when compared to other offerings
Societal marketing concept
The idea that a company's marketing decision should consider customer wants. the company's requirements, customer long-run interests and society's long-run interests - Shared value (where economic value is made such that societal value is also made) Eg: Nestle, Google, IBM, Unilever
Customer relationship management
The overall process of building and maintaining a profitable customer relationship by delivering superior customer value and satisfaction
Marketing concept
The philosophy that in order for the company to achieve the desired goals, they must first understand and know the needs and wants of customers and deliver better customer satisfaction than their competitors - follows the customer-orientated concept of the 'sense-respond' philosophy
Exchange
The process of obtaining a desirable object and offering an object in return Marketers want to have desirable exchange relationship with the customer including goods, services, ideas etc.
Market
The set of all actual and potential buyers of the product or service.
Identify the key elements of a customerdriven marketing strategy and discuss the marketing management orientations that guide marketing strategy.
To design a winning marketing strategy, the company must first decide whom it will serve. It does this by dividing the market into segments of customers (market segmentation) and selecting which segments it will cultivate (target marketing). Next, the company must decide how it will serve targeted customers (how it will differentiate and position itself in the marketplace). Marketing management can adopt one of five competing market orientations. The production concept holds that management's task is to improve production efficiency and bring down prices. The product concept holds that consumers favor products that offer the most in quality, performance, and innovative features; thus, little promotional effort is required. The selling concept holds that consumers will not buy enough of an organization's products unless it undertakes a large-scale selling and promotion effort. The marketing concept holds that achieving organizational goals depends on determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors do. The societal marketing concept holds that generating customer satisfaction and long-run societal well-being through sustainable marketing strategies is key to both achieving the company's goals and fulfilling its responsibilities.
Customer equity
Total customer lifetime values of both current and potential customers of the company Cadillac vs BMW
Digital and social media marketing
Using digital marketing tools such as websites, social media, blogs, email etc. in order to connect and engage with customers at any given time via their digital devices
Social media marketing
Using social media sites such as Facebook, Twitter, Instagram etc. to create social sharing and buzz about the product
Wants
Wants are the form human needs take as they are shaped by culture and individual personality Influenced by society and is described as objects that satisfy their needs
Marketing myopia
When marketers pay more attention to the specific product that the company offers, rather than the benefits and experiences it creates
Customer satisfaction
When the perceived value matches or exceeds the customer expectation
Demand
When wants are backed by purchasing power, they are called demand With their wants and resources, customers demand products and services that will have the highest value and satisfaction
marketing intermediaries
Wholesalers, retailers, distribution companies, agencies which help promote and distribute the product or service to the final customer
Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.
customer relationship management is the process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. Customer engagement marketing aims to make a brand a meaningful part of consumers' conversations and lives through direct and continuous customer involvement in shaping brand conversations, experiences, and community. The aim of customer relationship management and customer engagement is to produce high customer equity, the total combined customer lifetime values of all of the company's customers. The key to building lasting relationships is the creation of superior customer value and satisfaction. Companies want to not only acquire profitable customers but also build relationships that will keep them and grow "share of customer." Different types of customers require different customer relationship management strategies. The marketer's aim is to build the right relationships with the right customers. In return for creating value for targeted customers, the company captures value from customers in the form of profits and customer equity. In building customer relationships, good marketers realize that they cannot go it alone. They must work closely with marketing partners inside and outside the company. In addition to being good at customer relationship management, they must also be good at partner relationship management.
Customer generated marketing
form of customer engagement marketing where by brand exchanges are made by customer themselves (both invited and uninvited) and shaping their brand experiences and those of others
Relationship management strategy for barnacles
loyal but not profitable selling more, raising fees or reducing services provided to them may increase the company's profitability
Customer lifetime value
the value of the entire stream of purchases that a customer would make over their lifetime of purchases
Partner relationship management
working closely with other departments in the company and outside to jointly bring greater customer value and satisfaction