1 what is marketing dr. vesselin blagoev. 2 design a customer-driven marketing strategy understand...
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What is MarketingWhat is Marketing Dr. Vesselin Blagoev
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Design a customer-driven
marketing strategy
Understand the marketplace andcustomer needs
and wants
Construct an Integrated
marketing programthat delivers superior value
A simple model of the mktg processA simple model of the mktg process
Build profitablerelationships andcreate customer
delight
Capture value from customers to create profits and
customer equity
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Needs
Markets Wants
Transactions Demand
Exchange Products
Core
Marketing
Terms
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NeedsNeedsNeed
A sense that something necessary is missing, a state of felt deprivation.
Basic physical needs for food, clothing, warmth, and safety;
Social needs for belonging and affection;
Individual needs for knowledge and self-expression.
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WantsWantsWants
The manner in which individuals seek to satisfy a need as consumer decision making is influenced by individual tastes and social factors
The form taken by human needs as they are shaped by culture and individual personality
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Market offeringMarket offering
Some combination of products, services, information, or experiences offered to a market to satisfy a need or want (Kotler, 2008)
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Marketing myopiaMarketing myopia
The mistake of paying more attention to the specific products a company offers than to the benefits and experiences produced by these products (Armstrong and Kotler, 2011, p.35)
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Customer perceived valueCustomer perceived value
The customer’s evaluation of the difference between all the benefits and all the costs of a market offering relative to those of competing offers (Armstrong and Kotler, 2011, p.41)
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Customer satisfactionCustomer satisfaction
The extent to which a product’s perceived performance and value matches a buyer’s expectations
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Customer equityCustomer equity
The total combined customer lifetime values of all the company’s customers (Armstrong and Kotler, 2011, p.50)
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Customer relationships Customer relationships managementmanagement
The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction (Armstrong and Kotler, 2011, p.41)
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Demand Demand and Supplyand SupplyDemand
The ability and willingness of consumers to purchase a product
Quantity demandedMaximum quantity of a good that buyers are willing and able to buy at a given price (over a fixed period of time)
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DemandDemand
The Law of Diminishing Demand:If the price of a product is raised, a smaller quantity will be demanded and if the price of a product is lowered, a greater quantity will be demanded
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Demand CurveDemand Curve
Quantity
Price
P1
P2
Q1 Q2
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Demand curveDemand curve
P1
P2
Q1 Q2
Price
Quantity
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Demand curveDemand curve
The general demand relationships are typical for all products
A particular demand curve has meaning only for a particular market
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Elastic demandElastic demand
Elastic demand means that if prices are dropped, the quantity demanded will increase enough to increase total revenue
Inelastic demand ?
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Elastic demandElastic demandPrice
Q=Units demanded
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Inelastic demandInelastic demandPrice
Q=Units demanded
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Demand curveDemand curve
The whole demand curve is almost never only elastic, or only inelastic.
The elasticity refers to the change in total revenue between two points on the curve – not along the whole curve
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Demand andDemand and Supply SupplySupply
The ability and willingness of producers to provide wanted goods and services
Quantity suppliedMaximum quantity of a good that sellers are willing and able to supply at a given price (over a fixed period of time)
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Demand & SupplyDemand & SupplyDemand
Supply
Equilibrium point
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Marketing functionsMarketing functions
Product / Service Mgmt Pricing
Mktg Communications
Selling
Financing
Marketing activities can be categorized within several functions
Distribution
Mktg- Information
Mgmt
Marketing Education Resource Center (2000), Columbus, Ohio
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The operational functions The operational functions of marketingof marketing
The operational functions
of marketing
AdvertisingSales promotion Public relations
Stockholding Personal selling
Servicing
Risk-taking
Financing
Buying
Transporting
Market research
Forecasting
Pricing
Merchandising Branding
Publicity
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ProductProduct
A product is anything that can be offered to a market for attention, acquisition, use, or consumption and might satisfy a need or want (Armstrong and Kotler, 2011, p.237)
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MarketMarketA group of potential buyers with common needs or
problems that can be met by specific products or services
Consumer marketIndustrial marketReseller marketInstitutional market
CustomerConsumer (user)
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MarketsMarkets
Consumer OrganizationalIndividuals who purchase to benefit from consumption and not for the main purpose of making a profit
Buyers who purchase for resale, direct use in producing the goods or in general daily use in a business
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MarketsMarkets
Open marketsRegulated marketsUnregulated marketsDe-regulated markets
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Open marketsOpen markets
Markets with all of the following characteristics:
Single standardized productMany buyersMany sellersBuyers and sellers have equal
access to all available information relevant to the market.
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Open marketsOpen markets
The products are rarely homogeneous. Apples vary by variety and packaging making comparison by the buyer difficult. It affects Condition 1.
The numbers of potential buyers and the demand for products is constantly changing. It affects Condition 2.
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Open marketsOpen markets
The individual purchaser usually has a limited choice of supplier. What about Condition 3 ?
The buyers usually do not have as much information about the market as does the supplier. It affects Condition 4.
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Regulated marketsRegulated marketsThe regulations governing an
open market are designed to ensure that it is able to operate with none of the participants having an unfair advantage over the others.
Regulated markets recognize that there is a lack of balance between the parties and therefore this type of market has rules that are intended to ensure a degree of fair trading.
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Unregulated and Unregulated and Deregulated marketsDeregulated markets
Unregulated markets :
street market The buyer is ‘on their own’. Caveat emptor!
De-regulated markets : Removal of artificial monopoly restrictions in order to encourage free competition and increase customers’ choice.
telecommunications; e-commerce
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Exchange is :Exchange is :
A marketing transaction, in which the buyer gives something of value to the seller in return for goods or services
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A simple exchange processA simple exchange process
Supplier Customer
Something of value
Goods, services, benefits
Something of value
Money, exchange goods
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10 exchanges10 exchanges
Pots
Fruits Meat
Baskets Knives
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A market – 5 exchangesA market – 5 exchanges
Pots
Fruits Meat
Baskets Knives
CentralMarket
Middleman
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Exchanges Involving Exchanges Involving IntermediariesIntermediaries
Producer Wholesaler Retailer Consumer
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Definition 1Definition 1Marketing is an organizational function
and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders (AMA,2005)
http://www.marketingpower.com/mg-dictionary-view1862.php
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Definition 2Definition 2
Marketing is the process by which the companies create value for customers and build strong customer relationships in order to capture value from customers in return Armstrong and Kotler (2011)
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Definition 3Definition 3
Marketing is the management process responsible for identifying, anticipating and satisfying customers’ requirements profitably
British Chartered Institute of Marketing, UK
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Definitions 4 and 5Definitions 4 and 5Marketing is 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 (Kotler et al, 2005)
Marketing is the study of exchange processes especially those associated with the provision of goods and services (Adcock et al, 2001)
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Definitions 6 and 7Definitions 6 and 7Marketing is the process of planning and
executing the various activities, which are involved in selling goods, services, or ideas and which lead to an exchange between a seller and a buyer (Keegan et al, 1992)
Marketing is a human activity directed at satisfying needs and wants through exchange processes (Kotler, 2001)
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Definitions 8Definitions 8
Marketing is the management process that seeks to maximise returns to shareholders by developing relationships with valued customers and creating a competitive advantage (Doyle, 2004)
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Three major goalsThree major goals
Satisfaction of customer needs
Attainment of a competitive advantage over the rivals
Increasing the value of the company for the shareholders
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Selling vs. Marketing Concepts Selling vs. Marketing Concepts
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Marketing mixMarketing mix
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Influences on Decisions Influences on Decisions of Companiesof Companies
Uncontrollable market influences
Controllable company decisions
Product
Price
Place
Promotion
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Marketing mixMarketing mix
Target market
Marketingmix
Product
Promotion
Price
Place
Quality, Features, Options, Style, Brand name, Packaging, Sizes, Warranties
List price, Discounts,Allowances, Payment Terms, Credit terms
Channels, Locations,Inventory, Transport
Advertising, Personal selling, Sales Promotion, PR
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PROMOTION
PLACE
PRICE
Fact Finding& Analysis
PhysicalHandling
Servicing
Display
Packaging
Promotions
Advertising
PersonalSelling
Channels ofDistribution
Branding
Pricing
ProductPlanning PRODUCT
Borden 1964 McCarthy 1978
Source: Based on Borden, N. (1964) ‘The concept of the marketing mix’, Journal of Advertising Research, June, 2–7; McCarthy, E.J. (1978) Basic Marketing: A Managerial Approach, 6th edn. Homewood, IL: Richard D. Irwin
Elements of Marketing Mix – 4PElements of Marketing Mix – 4P
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PROMOTION
PLACE
PRICE
PRODUCT
New product developmentBrand management
Features, BenefitsPackaging & After-sales
Channel managementRetail locationRetail imageLogistics
Costs, Profit,Liquidity
CompetitivenessValue, Incentives
Marketingcommunications mix,Integratedcommunications
Marketing Mix – 4PMarketing Mix – 4P
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5S5S of e-marketing objectives of e-marketing objectives
Sizzle
Save Speak
Serve
Sell
Wider distribution, promotion and sales
Adding value by extra benefits online
Asking quest, dialog, use web
Save by using the online services
Extent the brand online
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6C of Online Value Proposition6C of Online Value PropositionThe Chartered Institute of MarketingThe Chartered Institute of Marketing
Costreduction
Choice Convenience
Community
ContentCusto-
misation
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CustomerService
Price
Promotion
PhysicalEvidence
Processes
People
PlaceProduct
Source: Adapted from Christopher, M., Payne, A. and Ballantyne, D. (1991) Relationship Marketing. Oxford: Butterworth Heinemann
7P of Customer Service & Mktg Mix7P of Customer Service & Mktg Mix
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COMMUNICATION
CONVENIENCE
COST TOCUSTOMER
CUSTOMERNEEDS/WANTS
PROMOTION
PLACE
PRICE
PRODUCT/SERVICE
Source: Based on Kotler, P., Armstrong, G., Saunders, J. and Wing, V. (1999) Principles of Marketing, 2nd European Edition. New York: Prentice Hall
From ‘4Ps’ to ‘4Cs’From ‘4Ps’ to ‘4Cs’
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Value & Types of UtilityValue & Types of Utility
UtilityValue that comes
from satisfying human needs
Form
Time
Place
Possession
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Form Utility: results from changes in the tangible parts of the product or service, i.e. made of more durable material
Time Utility: available when the customer needs it
Place Utility: Location, location, locationPossession Utility: affordability or lack of
resources. Using credit options, payment in installments
Value & Types of UtilityValue & Types of Utility
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Customer value is formed byCustomer value is formed by
Product benefits
Service benefits
Imagebenefits
Relationalbenefits
Monetary costs
Time costs
Energycosts
Psycholo-gical costs
Other costs
Perceived benefits
Perceived sacrifice
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Income and purchasing Income and purchasing powerpower
Disposable incomeMoney that consumers have left after paying taxes
Purchasing power (PP)The potential ability of consumers to buy goods and services
PP=Disposable income + Available credit
Discretionary incomeMoney that consumers have left after paying taxes and making
essential personal and household expenditures
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Marketing ConceptMarketing Concept
Because the purpose of business is to create and keep customers, it has only two central functions – marketing and innovation. The basic function of marketing is to attract and retain customers at a profit
Peter Drucker
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The Marketing ConceptThe Marketing Concept
The marketing concept, also referred to as marketing orientation, can be expressed as:
The achievement of corporate goals through meeting and exceeding customer needs better than the competition
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Value-Based MarketingValue-Based Marketing
Marketing is the management process that seeks to maximize returns to shareholders by developing relationships with valued customers and creating a competitive advantage
(Doyle, 2009)
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The Changing Role of MktgThe Changing Role of Mktg
Past Future
Objective of Mktg Create customer value
Create shareholder value
Marketing strategy
Increase market share
Develop and manage marketing assets
Assumptions Positive market performance leads to positive fin. results
Marketing strategies need to be tested in value terms
Contribution Knowledge of buyers,
competitors, channels
Knowledge how to lever mktg to increase shareholder value
Focus of marketing
Marketing orientation General management
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The Changing Role of MktgThe Changing Role of Mktg
Past Future
Concept of Assets Tangible Intangible
Rationale Improves profits Increases shareholder value
Performance measures
Market share, customer satisfaction, return on sales and investment
Shareholder value: discounted cash flows
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Marketing orientationsMarketing orientationsProduction orientationProduct orientationSales (selling) orientationClassical marketing orientationSocietal marketing orientationRelationship marketingValue-Based Marketing
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Production orientationProduction orientation
Production capabilities
Manufacture product
Aggressive sales effort
Customers
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Product orientationProduct orientation
New productdevelopment
Manufactureproduct
Aggressive sales efforts
Customers
Develop a better mousetrap and the world will beat a path to your door
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Sales orientationSales orientation
Manufacture product
Aggressive sales effort
CustomersAggressive advertising
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Marketing orientationMarketing orientation
Customer needs
Potential Market
opportunities
Marketing products and
servicesCustomers
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Marketing orientationMarketing orientation
Product orientation
Customer orientation
Competitor orientation
Marketing orientation
Customer oriented
Competition oriented
No Yes
No
Yes
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Societal marketing conceptSocietal marketing concept
It is based on the understanding that the customers’ needs must be satisfied only if they correspond to the long-term interests of the society
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Marketing orientationsMarketing orientations
Orientation Profit driver
Time
frame
Characteristics
Production Production methods
Until 1960
Improve production and distribution to reduce costs
Product Quality of product
Until 1970
Quality is paramount. Focus on product, not on needs
Selling Selling methods
1950- 1970
Effective selling and promotion are the major drivers to success
Marketing Needs & Wants
1970+ Focus of satisfying the needs and wants
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Marketing orientationsMarketing orientationsOrientation Profit
driverTime
frame
Characteristics
Societal marketing
Benefit to society
1990+ Same as marketing with the proviso that no harm will be done to society or nature
Relationship
marketing
Building and retaining good relations with the customers
1980+ Best possible attention, customer services and therefore build customers’ loyalty
Value-Based marketing
Value of the shares
2000+ Do everything to increase the value of the shares
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Ethics and social responsibilityEthics and social responsibility
Ethics: Moral principles and values that govern the actions and decisions of an individual or group. They serve as guidelines on how to act rightly and justify when faced with moral dilemmas
Laws: Society’s values and standards that are enforceable in the courts
Can make marketing decisions that are legal but unethical Can make marketing decisions that are illegal but ethical
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Consumer Bill of Rights (1962)Consumer Bill of Rights (1962)
Right to safetyRight to be informed Right to chooseRight to be heard
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Laws reduce confusionLaws reduce confusion
Socially responsible packaging:
Federal Fair Packaging and Labeling Act (USA, 1966) – the consumer goods must be clearly labeled in easy to understand terms.
Do you know the main points of the law in Bulgaria?
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ConsumerismConsumerism
A social movement that seeks to increase the rights and powers of consumers
Nader R.(1966) Unsafe at any speed, Pocket Books, NY
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Ethical exchange relationshipsEthical exchange relationships
Both buyer and seller should be better off after a transaction
Ethical choices are based on personal moral philosophy
Moral idealism Utilitarianism “Justice” perspectiveSocial responsibility
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LATE MARKETING ERA
• Supply >> Demand• Demand management
SOCIETAL MARKETING• Balance the interests
of the company and the society
EARLY MARKETING ERA
• Supply > Demand• Stiff competition
SELLING ERA•Demand = Supply •Weak competition
PRODUCTION ERA• Demand > Supply• Producers run the
show
BARTER ERA• Self-supply
•Markets do not exist
History of Marketing
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LATE MARKETING ERA
• Supply >> Demand• Demand management
SOCIETAL MARKETING• Balance the interests
of the company and the society
EARLY MARKETING ERA
• Supply > Demand• Stiff competition
SELLING ERA•Demand = Supply •Weak competition History of Marketing
MARKETING RELATIONSHIPS• Supply >> Demand• Know thy customer
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Why the marketing is Why the marketing is important?important?
Marketing is the science of exchange
Exchange is the foundation of organization activities Unless the organizations can encourage exchange,
their resource bases disappear Move to marketing in many sectors. Marketing
concepts can be used for Business, Services, Financial services, Non-for-profit, Politics, Schools, Public opinion
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Marketing must be POISEMarketing must be POISE
Hugh Davidson argues that successful marketing is marked with POISE. It must be:
P Profitable
O Offensive (rather than defensive)
I Integrated
S Strategic (future-oriented)
E Effective (it gets results)
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1950s 1960s 1970s 1980s 1990s 2000s
Consumermarketing
Industrialmarketing
Non-profitmarketing
Servicesmarketing
Relationshipmarketing
?
Source: Adapted from Christopher, M., Payne, A. and Ballantyne, D. (1991) Relationship Marketing. London: Butterworth Heinemann
Developments in MarketingDevelopments in Marketing
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Consumer GdsRelationshipMarketing
ServicesMarketing
Industr
ial (B
2B)
Marke
ting
NordicSchool
NetworkApproach
Anglo-AustralianApproach
Strategic Alliances& Partnership
Research
(Egan, 2001)
Influences on RMInfluences on RM
86Source: Based on Brodie, R.J., Coviello, N.E., Brookes, R.W. and Little, V. (1997) ‘Towards a paradigm shift in marketing; an examination of current marketing practices’, Journal of Marketing Management, 13(5), 383–406
RM DefinitionsRM Definitions
DatabaseMarketing
Business/CustomerPartnering
Customer Partnering(Company Relationships)
Catch-all Category
Breadth of relationship definition
Most generallyaccepted definitions of relationship marketing
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Relationship MarketingRelationship Marketing
direct marketing customer relationship
management (CRM) micromarketing loyalty-based marketing wraparound marketing symbiotic marketing relevance marketing frequency marketing dialogue marketing
database marketing data-driven marketing one-to-one marketing ‘segment-of-one’ marketing customer partnering individual marketing bonding integrated marketing interactive marketing
Terms used either as substitute for or to describesimilar concepts to Relationship Marketing
Source: Based on Vavra, T.G. (1992) Aftermarketing. Homewood, IL: Richard D. Irwin; Buttle, F.B. (1996) Relationship Marketing Theory and Practice. London: Paul Chapman; Tapp, A. (1998) Principles of Direct and Database Marketing. London: Financial Times Management/Pitman Publishing
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RM DefinitionsRM Definitions
Christopher et al (1991):RM is where
customer service quality management marketing
come togetherOther definitions stress time frame and
commitment
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Grönroos (1994)
“identify and establish, maintain and enhance and, when necessary, terminate relationships with customers and other stakeholders, at a profit so that the objectives of all parties involved are met; and this is done by mutual exchange and fulfilment of promises”
Source: Grönroos, C. (1994) ‘From marketing mix to relationship marketing: towards a paradigm shift in marketing’, Management Decisions, 32(2), 4–20
RM DefinitionsRM Definitions
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Source: Adapted from Gordon, I.H. (1998) Relationship Marketing. Etobicoke, Ontario: John Wiley & Sons
Relationship MarketingRelationship Marketing Seeks to create new value for customers and share it Recognises the key role that customers have both as purchasers
and in defining the value they wish to achieve. Businesses are seen to design and align processes,
communication, technology and people to achieve customer value.
Represents continuous cooperative effort between buyers and sellers.
Recognises the value of customer’s purchasing lifetimes (i.e. lifetime value)
Seeks to build a chain of relationships within the organisation (to create customer value) and between the organisation and its main stakeholders including suppliers, distr.channels, intermediaries,shareholders.
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TM versus RMTM versus RM
TRANSACTIONS Single sale focus Discontinuous
customer contact Features orientation Short time scale Little service emphasis Low commitment Quality a production
issue
RELATIONSHIPS Retention focus Continuous customer
contact Benefits orientation Long time scale High service emphasis High commitment Quality everyone’s
concernSource: Adapted from Payne, A., Christopher, M. and Peck, H. (eds) (1995) Relationship Marketing for Competitive Advantage: Winning and Keeping Customers. Oxford: Butterworth Heinemann
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TM/RM Continuum
Importance ofCore Product
Importance ofCustomer Service
TM/RM ContinuumTM/RM Continuum