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Copyright © 2007 Pearson Education Canada1-1

Marketing: An IntroductionSecond Canadian Edition

Armstrong, Kotler, Cunningham, Mitchell and Buchwitz

Chapter One

Marketing: Managing ProfitableCustomer Relationships




Looking Ahead Define marketing and the marketing processes.

Explain the importance of understanding

customers and the marketplace. Identify the five core marketplace concepts.

Identify the key elements of a customer-drivenmarketing strategy.

Discuss customer relationship managementand ways of creating and obtaining value.

Describe the major trends and forces changingtoday¶s marketing landscape.




What is Marketing? Attracting new customers by promising

and delivering superior value.

Building long-term relationships withcustomers by delivering continued

customer satisfaction.

Creating, building and managing theserelationships profitably over time.




The Marketing Process Understand the marketplace and customer

needs and wants.

Design a customer-driven marketing strategy. Construct a marketing program that delivers

superior value.

Build profitable relationships and create

customer delight.

Capture value from customers to create

profits and customer equity.




Needs, Wants and Demands Needs are states of felt deprivation.

±Physical:

Food, clothing, shelter, safety.

±Social:

Belonging, affection.

± Individual:

Learning, knowledge, self-expression.




Needs, Wants and Demands Wants are needs shaped by culture and

individual personality.

± Jeans vs a sari.

± Individual expression vs. collective good.

Demands are wants combined with

buying power. ± Hilfiger vs. Giant Tiger.

± Jetta vs. Jaguar.




Fulfilling Needs and Wants Marketers create marketing offers in

response.

± A combination of goods, services,information or experiences offered to a

market to satisfy a need or want.




Products, Services, Experiences Products.

± Anything that can be offered for.

± Acquisition, attention, use or consumption.

± That might satisfy a need or want.

Services. ± Activities or benefits offered.

± Essentially intangible.

± Do not result in ownership of anything. Experiences.

± Create, stage and market brand experiences.

± Attending live theatre, music concert.




Marketing Myopia Sellers pay more attention to the specific

products they offer than to the benefits and

experiences produced by the products. They focus on the ³wants´ and lose sight of the

³needs.´

± The great railroads lost out to the exploding trucking

industry. ± They forgot that their business was solving

transportation problems, not running railroads.




Value and Satisfaction If the performance and the customer¶s

experience is lower than expectations,

than customer satisfaction is low. If the performance and the customer¶s

experience meets expectations, than thecustomer is satisfied.

If the performance and the customer¶sexperience exceeds expectations, thanthe customer is delighted.




Exchange and Transactions Exchange.

± The act of obtaining a desired object from

someone by offering something in return. Transaction.

± A trade between two parties that involves:

two things of value.

agreed upon conditions.

time of agreement.

place of agreement.




What is a Market? The set of actual and potential buyers of

a product.

These people share a need or want thatcan be satisfied through exchange

relationships.




Core Marketplace Concepts Customers have needs, wants and

demands.

Marketers offer products or services. Customers seek value and satisfaction

from offers.

Demands and offers result intransactions and relationships.

Markets are all potential customers with asimilar demand.




Customer-Driven Marketing Divide markets into segments.

Choose the right segment to target.

Offer a unique value proposition.

Differentiate your offer from competitor

offers.

Build customer value and satisfaction.

Nurture long-term customer relationships.




Marketing Management

The art and science of choosing target

markets and building profitable

relationships with them.




Segmentation and Targeting Segmentation divides the market into

groups of customers with varying needs

and wants. Targeting selects the right segment to

nurture.




Demand Management Marketing management seeks to control

demand.

± Increasing demand is the norm. ± Demarketing seeks to reduce demand in

certain circumstances.




Value Proposition

The set of benefits or values the company

promises to deliver to its target marketsto satisfy their needs.




Marketing Concepts Production ± affordability and availability.

Product -- quality and innovation.

Selling -- promotion and hard selling.

Marketing -- customer satisfaction and

relationships.

Societal ± long-term value to both

customer and society.




The Selling Concepts The production concept.

± Consumers will favour products that areavailable and highly affordable.

The product concept. ± Consumers favour products that offer the most

in quality, performance and innovativefeatures.

The selling concept. ± Consumers will not buy unless it undertakes a

large-scale selling and promotional effort.




The Marketing Concepts The marketing concept.

± Determining the needs and wants of target

markets and delivering the desiredsatisfactions more effectively and efficiently

then the competitors.

± An ³outside-in´ perspective.

± Customers are the paths to sales and

profits.

± See next slide for a comparison.




The Marketing Concepts The societal marketing concept.

± Generating customer satisfaction and long-

run societal well-being are the keys to bothachieving the company¶s goals and fulfilling

its responsibilities.

± Balances human welfare, company profits

and consumer satisfaction.

± Addresses broader social issues.




Relationship Marketing Customer relationship management.

The process of building and

maintaining profitable customer

relationships by delivering superior

customer value and satisfaction.




The Customer¶s Experience Customer perceived value.

± Customer¶s subjective view of the offer¶s value

compared to competitive offers. Customer satisfaction.

± Customer¶s subjective view of the value received in

return for the purchase price.

Customer delight. ± Customer¶s subjective view of the increased

value received above the purchase price.




Building Relationships Relationships span from the basic to tight

integrated relationships.

Successful relationships are built on:

± Financial benefits.

± Social benefits.

± Structural ties.




Partner Relationship Marketing Working with partners in other company

departments and outside the company to

jointly bring greater value to thecustomers.

± Every department in an organizationcontributes to customer satisfaction.

± Suppliers are carefully controlled throughsupply chain management.

± Strategic alliances create new opportunitiesto delight customers.




Capturing Value In Return Customer lifetime value.

± The value of the entire stream of

purchases that the customer would makeover a lifetime of patronage.




Capturing Value In Return Share of customer.

± Share of customer is the percentage of

customers that buy a company¶s product of all customers purchasing in that productcategory.

± Companies continuously strive to grow their share of customer.

± Creating brand extensions is a favouredmethod of growing share of customer.




Building Customer Equity The total combined customer lifetime

value of all of the company¶s customers.

Often a more accurate measure of acompany¶s value than sales or market

share.

Combination of market share, share of customer and lifetime customer value.




Customer Relationship Groups Targeting the right customers at the right

time.

± Butterflies have high profitability with low loyalty. ± True Friends have high profitability with high loyalty.

± Strangers have low profitability with low loyalty.

± Barnacles have low profitability with high loyalty.

Challenge: make the Butterflies more loyaland make the Barnacle more profitable.

Keep the True Friends and ³fire´ the Strangers.




New Marketing Technologies Technology has changed how marketers

build value.

± Internet and e-commerce/e-business. ± Fast and global communications.

± Wireless technologies.

± Relational databases. Instant, highly targeted communication

with customers and suppliers.




New Global Markets International trade is the new frontier.

Export is critical to Canada¶s economic

growth.

Difficult decision:

± Delay means risking loss of growing global

markets. ± Proceed means high risk but potentially high

reward.




Ethics and Responsibility Worldwide consumerism and

environmentalism movements exert.

pressure for greater responsibility Notion of ³caring capitalism´ tied to

societal marketing concepts.

± Seeking ways to make a profit by serving thebest long-run interests of customers and

communities.




Not-For-Profit Marketing Marketing of ideas, values and

institutions.

Increasing awareness that theseorganizations must build relationships

with constituents and stakeholders.

Challenge of using new marketingtechniques for not-for-profit initiatives.




Looking Back Define marketing and the marketing processes.

Explain the importance of understandingcustomers and the marketplace.

Identify the five core marketplace concepts.

Identify the key elements of a customer-drivenmarketing strategy.

Discuss customer relationship managementand ways of creating and obtaining value.

Describe the major trends and forces changingtoday¶s marketing landscape.

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