marketing: managing profitable customer relationships a global perspective 1 philip kotler gary...

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Marketing: Managing Profitable Customer

Relationships

A Global A Global PerspectivePerspective

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Philip KotlerPhilip KotlerGary ArmstrongGary ArmstrongSwee Hoon AngSwee Hoon Ang

Siew Meng LeongSiew Meng LeongChin Tiong TanChin Tiong Tan

Oliver Yau Hon-Oliver Yau Hon-MingMing

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Learning ObjectivesAfter studying this chapter, you should be able to:

1. Define marketing and outline the steps in the marketing process

2. Explain the importance of understanding customers and the marketplace, and identify the five core marketplace concepts

3. Identify the key elements of a customer-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy

4. Discuss customer relationship management, and identify strategies for creating value for customers and capturing value from customers in return

5. Describe the major trends and forces that are changing the marketing landscape in this age of relationships

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Chapter Outline1. What Is Marketing?

2. Understanding the Marketplace and Customer Needs

3. Designing a Customer-Driven Marketing Strategy

4. Preparing an Integrated Marketing Plan and Program

5. Building Customer Relationships

6. Capturing Value from Customers

7. The New Marketing Landscape

8. So, What Is Marketing? Pulling It All Together

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What Is Marketing?Marketing Defined

Marketing is the process by which companies create value for customers and build strong customer relationships to capture value from customers in return.

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What Is Marketing?The Marketing Process

• Understand the marketplace and customer wants and needs

• Design a customer-driven marketing strategy• Construct a marketing plan that delivers

superior value• Build profitable relationships and create

customer satisfaction• Capture value from customers to create profit

and customer equity

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Create customer driven marketing strategy

Construct a marketing program that delivers superior value

Build profitable relationships & create customer delight

Capture value from customers to create profits & customer quality

Understand the marketplace and customers’ needs/wants

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Understanding the Marketplaceand Customer NeedsCustomer Needs, Wants, and DemandsNeeds are states of deprivation:• Physical—food, clothing, warmth, safety• Social—belonging and affection• Individual—knowledge and self-expression

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Customer Needs, Wants, and Demands

• Wants are the form that needs take as they are shaped by culture and individual personality.

• Demands are wants backed by buying power.

Understanding the Marketplaceand Customer Needs

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Market Offerings—Products, Services, and Experiences

• Market offerings are some combination of products, services, information, or experiences offered to a market to satisfy a need or want.

• Marketing myopia is focusing only on existing wants and losing sight of underlying consumer needs.


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Customer Value and SatisfactionSatisfaction is derived from comparing performance

with expectations

Expectations• Customers make choices according to

• Values and satisfaction of various market offerings• Marketers

• Set the right level of expectations• Not too high or too low


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Exchanges and Relationships

• Exchange is the act of obtaining a desired object from someone by offering something in return.

• Marketing consists of actions to build and maintain desirable exchange relationships.


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• Markets are the set of actual and potential buyers of a product.

• Marketing system consists of all of the actors (suppliers, company, competitors, intermediaries, and end users) in the system who are affected by major environmental forces: Demographic; Economic; Physical; Technological; Political-legal; Socio-cultural


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Elements of a Modern Marketing System

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Designing a Customer-Driven Marketing Strategy

Marketing Management

• Marketing management is the art and science of choosing target markets and building profitable relationships with them.

• What customers will we serve?• How can we best serve these customers?

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Selecting Customers to Serve

• Market segmentation: Dividing the markets into segments of customers

• Target marketing: Which segments to go after


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• De-marketing • Marketing to reduce demand temporarily or

permanently • The aim is not to destroy demand but to reduce or

shift it.


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Marketing management is:• Customer management• Demand management


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Choosing a Value Proposition

The value proposition is the set of benefits or values a company promises to deliver to customers to satisfy their needs.


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Marketing Management Orientations

• Production concept• Product concept• Selling concept• Marketing concept• Societal concept


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The production concept is the idea that consumers will favor products that are available or highly affordable.


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Product concept is the idea that consumers will favor products that offer the most quality, performance, and features for which the organization should therefore devote its energy to making continuous improvements.


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Selling concept is the idea that consumers will not buy enough of the firm’s products unless it undertakes a large scale selling and promotion effort.


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Marketing concept is the idea that achieving organizational goals depends on knowing the needs and wants of the target markets and delivering the desired satisfactions better than competitors do.


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Customer Driven vs. Customer Driving Marketing

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Societal marketing concept is the idea that a company should make good marketing decisions by considering consumers’ wants, the company’s requirements, consumers’ long-term interests, and society’s long-run interests.


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Preparing an Integrated Marketing Plan and Program

Marketing MixThe marketing mix is the set of tools (four Ps) the firm

uses to implement its marketing strategy:• Product – create a need-satisfying market offering• Price – decide how much it will charge for the offer• Promotion – communicate with target customers about

the offer and persuade them of its merits• Place – decide how it will make the offer available to

target consumers

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Integrated Marketing Program

An integrated marketing program is a comprehensive plan that communicates and delivers the intended value to chosen customers.

Preparing an Integrated Marketing Plan and Program

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Customer Relationship Management (CRM)

Customer relationship management is the overall process of building and maintaining profitable customer relationships by delivering superior value and satisfaction.

Building Customer Relationships

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Customer perceived value is the difference between total customer value and total customer cost of a market offering relative to those of competing offers.

Customer satisfaction is the extent to which a product’s perceived performance matches a buyer’s expectations.


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A Customer’s Perception of Value

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Customer Relationship Levels and Tools• Basic relationship (with low-margin customers)• Full relationships (with high-margin/key customers)Developing strong bonds with customers through• Frequency marketing programs• Club marketing programs


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The Changing Nature of Customer Relationships Relating with more carefully selected customers uses

selective relationship management to target fewer, more profitable customers.

Relating for the long term uses customer relationship management to retain current customers and build profitable, long-term relationships.

Relating directly uses direct marketing tools (telephone, mail order, kiosks, Internet) to make direct connections with customers.


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Partner Relationship Management

Partner relationship management refers to working closely with partners in other company departments and outside the company to jointly bring greater value to customers.


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• Partners inside the company is every function area interacting with customers.

• Electronically• Cross-functional teams

• Partners outside the company is how marketers connect with their suppliers, channel partners, and competitors by developing partnerships.


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• The supply chain is a channel that stretches from raw materials to components to final products to final buyers.

• Supply management• Strategic partners• Strategic alliances


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Creating Customer Loyalty and Retention

Customer lifetime value is the value of the entire stream of purchases that the customer would make over a lifetime of patronage.

Capturing Value from Customers

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Growing Share of Customer

Share of customer is the portion of the customer’s purchasing that a company gets in its product categories.


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Building Customer Equity

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


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Building Customer Equity

• Building the right relationships with the right customers involves treating customers as assets that need to be managed and maximized.

• Different types of customers require different relationship management strategies

• Build the right relationship with the right customers


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Major DevelopmentsDigital age• Globalization• Ethics and social responsibility• Not-for-profit marketing• The new world of marketing relationships

The New Marketing Landscape

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The New Digital Age• Recent technology has had a major impact on the ways

marketers connect with and bring value to their customers

• Market research • Learning about and tracking customers

• Create new customized products• Distribution• Communication

• Video conferencing• Online data services


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The New Digital Age

Internet—creates marketplaces and Marketspaces

• Information• Entertainment• Communication


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Rapid Globalization

• The world is smaller• Think globally, act locally


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The Call for More Ethics and Social Responsibility

Marketers are being called upon to take greater responsibility for the social and environmental impact of their actions in a global economy.


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The Call for More Ethics and Social Responsibility

Social marketing campaigns encourage energy conservation and concern for the environment or discourage smoking, excessive drinking, and drug use.


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The Growth for Not-for-Profit Marketing• Colleges• Hospitals• Museums• Zoos• Orchestras• Religious groups


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Pulling it All Together

marketing: managing profitable customer relationships a global perspective 1 philip kotler gary...

Documents

customer needs customer

customer value

marketing defined marketing

customer needs slide

marketing process

marketing program

marketing myopia

customer equity slide