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Marketing:Marketing:
Managing Profitable Managing Profitable Customer RelationshipsCustomer Relationships
1
Professor TakadaProfessor Takada 1-2
ROAD MAP: Previewing the Concepts
• What is marketing?What is marketing?• Key steps in the marketing process.Key steps in the marketing process.• Consumers’ needs and wants.Consumers’ needs and wants.• Five core marketplace concepts.Five core marketplace concepts.• Key elements of a customer-driven marketing Key elements of a customer-driven marketing
strategy.strategy.• Marketing management orientations that guide Marketing management orientations that guide
marketing strategy.marketing strategy.• Customer relationship management and Customer relationship management and
strategies.strategies.• Major trends and forces that are changing the Major trends and forces that are changing the
marketing landscape in this new age of marketing landscape in this new age of relationships.relationships.
Professor TakadaProfessor Takada 1-3
What is Marketing?
Marketing 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.
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What is Marketing Management?
Marketing management is theart and science
of choosing target markets and getting, keeping, and growing
customers throughcreating, delivering, and communicating
superior customer value.
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Selling is only the tip of the iceberg
“There will always be need for some selling. But the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy. All that should be
needed is to make the product or service available.”
Peter Drucker
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Designing the “Right” Product
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Only the best is good enough for Lexus customers
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Key Customer MarketsConsumer Markets
Business Markets
Global Markets
Nonprofit/ Government Markets
Professor TakadaProfessor Takada 1-9
ROAD MAP:
• What is marketing?What is marketing?• Key steps in the marketing process.Key steps in the marketing process.• Consumers’ needs, wants, and demands.Consumers’ needs, wants, and demands.• Five core marketplace concepts.Five core marketplace concepts.• Key elements of a customer-driven marketing Key elements of a customer-driven marketing
strategy.strategy.• Marketing management orientations that guide Marketing management orientations that guide
marketing strategy.marketing strategy.• Customer relationship management and Customer relationship management and
strategies.strategies.• Major trends and forces that are changing the Major trends and forces that are changing the
marketing landscape in this new age of marketing landscape in this new age of relationships.relationships.
Professor TakadaProfessor Takada 1-10
A Simple Model of the Marketing Process
Understand the marketplace
and customer needs and
wants
Understand the marketplace
and customer needs and
wants
Capture value from customers to create profits and customer equity
Capture value from customers to create profits and customer equity
Create value for customers and build customer
relationships
Capture value from customers
in return
Design a customer-driven
marketingstrategy
Design a customer-driven
marketingstrategy
Build profitable relationships and
createcustomer delight
Build profitable relationships and
createcustomer delight
Construct a marketing program
that delivers superior value
Construct a marketing program
that delivers superior value
Professor TakadaProfessor Takada 1-11
ROAD MAP: Previewing the Concepts
• What is marketing?What is marketing?• Key steps in the marketing process.Key steps in the marketing process.• Consumers’ needs, wants, and demands.Consumers’ needs, wants, and demands.• Five core marketplace concepts.Five core marketplace concepts.• Key elements of a customer-driven marketing Key elements of a customer-driven marketing
strategy.strategy.• Marketing management orientations that guide Marketing management orientations that guide
marketing strategy.marketing strategy.• Customer relationship management and Customer relationship management and
strategies.strategies.• Major trends and forces that are changing the Major trends and forces that are changing the
marketing landscape in this new age of marketing landscape in this new age of relationships.relationships.
Professor TakadaProfessor Takada 1-12
NeedsNeeds - state of felt deprivation including - state of felt deprivation including physical, social, and individual needs.physical, social, and individual needs.
Types of Needs• Physical:Physical:
– Food, clothing, shelter, safetyFood, clothing, shelter, safety
• Social:Social:– Belonging, affectionBelonging, affection
• Individual:Individual:– Learning, knowledge, self-expressionLearning, knowledge, self-expression
WantsWants - form that a human need - form that a human need takes, as shaped by culture and takes, as shaped by culture and individual personality.individual personality.
Professor TakadaProfessor Takada 1-13
I want it, I need it…
5 5 Types of NeedsTypes of Needs
• Stated needsStated needs
• Real needsReal needs
• Unstated needsUnstated needs
• Delight needsDelight needs
• Secret needsSecret needs
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What is Marketed?GoodsGoods
ServicesServices
Events & ExperiencesEvents & Experiences
PersonsPersons
Places & PropertiesPlaces & Properties
OrganizationsOrganizations
InformationInformation
IdeasIdeas
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Marketing Goods
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Marketing Ideas: Friends Don’t Let Friends Drive Drunk
This is the watch Stephen Hollingshead, Jr. was wearing when he encountered a drunk driver. Time of death 6:55 p.m.
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ProductsAnything that can be Offered to a Market to Satisfy a Need or Want
ProductsAnything that can be Offered to a Market to Satisfy a Need or Want
PersonsPersons PlacesPlaces OrganizationsOrganizations
IdeasIdeasInformationInformation
What Satisfies Consumers’ Needs and Wants?
ServicesActivity or Benefit Offered for Sale That is Essentially
Intangible and Does Not Result in the Ownership of Anything
ServicesActivity or Benefit Offered for Sale That is Essentially
Intangible and Does Not Result in the Ownership of Anything
Professor TakadaProfessor Takada 1-18
Product as an Idea
Products do not have to be physical objects. Here the “product” is an idea—protecting animals.
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Marketing Myopia
• Sellers pay more Sellers pay more attention to the attention to the specific products they specific products they offer than to the offer than to the benefits and benefits and experiences produced experiences produced by the products.by the products.
• They focus on the They focus on the “wants” and lose sight “wants” and lose sight of the “needs.”of the “needs.”
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Value and Satisfaction
Expectation
Performance810
If performance is lower than expectations, satisfaction is low.
If performance is higher than expectations, satisfaction is high.
Expectation
Performance
108
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A Simple Marketing System
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Elements of a Modern Marketing System
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Structure of Flows in a Modern Exchange Economy
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Marketing Management
• The art and science of choosing target The art and science of choosing target markets and building profitable markets and building profitable relationships with them.relationships with them.
Questions to ask:Questions to ask:
1.1. What customers will we serve?What customers will we serve?What is our target market?What is our target market?
2.2. How can we best serve these How can we best serve these customers?customers?
What is our value proposition?What is our value proposition?
Professor TakadaProfessor Takada 1-25
Segmentation and Target Marketing
Market Segmentation:
Divide the market into segments of customers
Target Marketing:
Select the segment to cultivate
#1 #2
Professor TakadaProfessor Takada 1-26
Marketing Management
Finding and increasing Finding and increasing demand, also changing or demand, also changing or reducing demand, such as reducing demand, such as in demarketing.in demarketing.
DemandDemandManagementManagement
Temporarily or Temporarily or permanently reducing the permanently reducing the number of customers or number of customers or shifting their demand.shifting their demand.
DemarketingDemarketing
Professor TakadaProfessor Takada 1-27
ROAD MAP:
• What is marketing?What is marketing?• Key steps in the marketing process.Key steps in the marketing process.• Consumers’ needs and wants.Consumers’ needs and wants.• Five core marketplace concepts.Five core marketplace concepts.• Key elements of a customer-driven marketing Key elements of a customer-driven marketing
strategy.strategy.• Marketing management orientations that guide Marketing management orientations that guide
marketing strategy.marketing strategy.• Customer relationship management and Customer relationship management and
strategies.strategies.• Major trends and forces that are changing the Major trends and forces that are changing the
marketing landscape in this new age of marketing landscape in this new age of relationships.relationships.
Professor TakadaProfessor Takada 1-28
Marketing Management Philosophies
Production ConceptProduction Concept
Product ConceptProduct Concept
Selling ConceptSelling Concept
Marketing ConceptMarketing Concept
Societal Marketing ConceptSocietal Marketing Concept
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Marketing and Sales Concepts Contrasted
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Societal Marketing Concept
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Corporate Social Initiatives
Professor TakadaProfessor Takada 1-32
Corporate Social Initiatives
Professor TakadaProfessor Takada 1-33
Holistic Marketing Dimensions
Professor TakadaProfessor Takada 1-34
ROAD MAP:
• What is marketing?What is marketing?• Key steps in the marketing process.Key steps in the marketing process.• Consumers’ needs and wants.Consumers’ needs and wants.• Five core marketplace concepts.Five core marketplace concepts.• Key elements of a customer-driven marketing Key elements of a customer-driven marketing
strategy.strategy.• Marketing management orientations that guide Marketing management orientations that guide
marketing strategy.marketing strategy.• Customer relationship management and Customer relationship management and
strategies.strategies.• Major trends and forces that are changing the Major trends and forces that are changing the
marketing landscape in this new age of marketing landscape in this new age of relationships.relationships.
Professor TakadaProfessor Takada 1-35
The Marketing Mix
CustomerCustomerNeedsNeeds
ProductProduct PricePrice
PromotionPromotion DistributionDistribution
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Marketing-Mix Strategy
Professor TakadaProfessor Takada 1-37
Marketing Mix and the Customer
Four P’sFour P’s
• ProductProduct
• PricePrice
• PlacePlace
• PromotionPromotion
Four C’sFour C’s
• Customer Customer solutionsolution
• Customer costCustomer cost
• ConvenienceConvenience
• CommunicationCommunication
Professor TakadaProfessor Takada 1-38
Factors Influencing Marketing Strategy
Professor TakadaProfessor Takada 1-39
Marketing Management Tasks
• Developing Developing marketing marketing strategiesstrategies
• Capturing marketing Capturing marketing insightsinsights
• Connecting with Connecting with customerscustomers
• Building strong Building strong brandsbrands
• Shaping market Shaping market offeringsofferings
• Delivering valueDelivering value
• Communicating Communicating valuevalue
• Creating long-Creating long-term growthterm growth
Professor TakadaProfessor Takada 1-40
ROAD MAP:
• What is marketing?What is marketing?• Key steps in the marketing process.Key steps in the marketing process.• Consumers’ needs and wants.Consumers’ needs and wants.• Five core marketplace concepts.Five core marketplace concepts.• Key elements of a customer-driven marketing Key elements of a customer-driven marketing
strategy.strategy.• Marketing management orientations that guide Marketing management orientations that guide
marketing strategy.marketing strategy.• Customer relationship management and Customer relationship management and
strategies.strategies.• Major trends and forces that are changing the Major trends and forces that are changing the
marketing landscape in this new age of marketing landscape in this new age of relationships.relationships.
Professor TakadaProfessor Takada 1-41
Customer Relationship Management
• The process of building and The process of building and maintaining profitable customer maintaining profitable customer relationships by delivering superior relationships by delivering superior customer value and satisfaction.customer value and satisfaction.
Customer Perceived Value
• Customer’s evaluation of the difference Customer’s evaluation of the difference between all the benefits and all the between all the benefits and all the costs of a marketing offer relative to costs of a marketing offer relative to those of competing offers.those of competing offers.
Professor TakadaProfessor Takada 1-42
Customer Relationship Levels
Basic Relationship
Full Partnershi
p
Continuum
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Loyalty and Retention
Financial Benefits
Social Benefits
Structural Ties
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Partner Relationship Marketing
Partners Inside the Firm
1. All employees customer focused
2. Teams coordinate efforts toward customers
Partners Outside the Firm
1. Supply chain management
2. Strategic alliances
Professor TakadaProfessor Takada 1-45
• Customer Lifetime ValueCustomer Lifetime Value– The entire stream of purchases that the The entire stream of purchases that the
customer would make over a lifetime of customer would make over a lifetime of patronage.patronage.• Share of CustomerShare of Customer
– The share a company gets of the customers The share a company gets of the customers purchasing in their product categories.purchasing in their product categories.
Customer Loyalty & Retention
Customer Equity
• Customer equity is the total Customer equity is the total combined customer lifetime values combined customer lifetime values of all the company’s customers.of all the company’s customers.
Professor TakadaProfessor Takada 1-46
Customer Relationship Groups
Projected loyalty
High
Profitability
Low
Long-term customers
Short-term customers
Good fit between company’s offerings and customer’s needs; high
profit potential
Limited fit between company’s offerings and customer’s needs; low
profit potential
Little fit between company’s offerings and customer’s
needs; lowest profit potential
Good fit between company’s offerings and
customer’s needs; highest profit potential
Strangers
Butterflies True Friends
Barnacles
Professor TakadaProfessor Takada 1-47
ROAD MAP:
• What is marketing?What is marketing?• Key steps in the marketing process.Key steps in the marketing process.• Consumers’ needs and wants.Consumers’ needs and wants.• Five core marketplace concepts.Five core marketplace concepts.• Key elements of a customer-driven marketing Key elements of a customer-driven marketing
strategy.strategy.• Marketing management orientations that guide Marketing management orientations that guide
marketing strategy.marketing strategy.• Customer relationship management and Customer relationship management and
strategies.strategies.• Major trends and forces that are changing the Major trends and forces that are changing the
marketing landscape in this new age of marketing landscape in this new age of relationships.relationships.
Professor TakadaProfessor Takada 1-48
The Internet
• The The InternetInternet has been hailed as the has been hailed as the technology behind a New Economy.technology behind a New Economy.
• Marketing applications include:Marketing applications include:– ““Click-and-mortar” companiesClick-and-mortar” companies– ““Click-only” companiesClick-only” companies– Business-to-business e-commerceBusiness-to-business e-commerce
• Business-to-business transactions Business-to-business transactions online are expected to reach $4.3 online are expected to reach $4.3 trillion in 2005.trillion in 2005.
• By 2005, 500,000 companies will use By 2005, 500,000 companies will use the Internet to do business.the Internet to do business.
Professor TakadaProfessor Takada 1-49
New Marketing Landscape
Rapid Globalization
Ethics & SocialResponsibility
New World of MarketingRelationships
Not-for-ProfitMarketing
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Global Markets
Coke is represented at the first China International Beverage Festival in Beijing in 2003
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The marketplace isn’t what it used to be…
Changing technologyChanging technology
GlobalizationGlobalization
DeregulationDeregulation
PrivatizationPrivatization
EmpowermentEmpowerment
CustomizationCustomization
ConvergenceConvergence
DisintermediationDisintermediation
Professor TakadaProfessor Takada 1-52
Core Concepts
• Needs, wants, and Needs, wants, and demandsdemands
• Target markets, Target markets, positioning, positioning, segmentationsegmentation
• Offerings and Offerings and brandsbrands
• Value and Value and satisfactionsatisfaction
• Marketing Marketing channelschannels
• Supply chainSupply chain
• CompetitionCompetition
• Marketing Marketing environmentenvironment
• Marketing Marketing planningplanning
Professor TakadaProfessor Takada 1-53
Rest Stop: Reviewing the Concepts
1.1. Define marketing and outline the steps in the Define marketing and outline the steps in the marketing process.marketing process.
2.2. Explain the importance of understanding customers Explain the importance of understanding customers and the marketplace, and identify the five core and the marketplace, and identify the five core marketplace concepts.marketplace concepts.
3.3. Identify the key elements of a customer-driven Identify the key elements of a customer-driven marketing strategy and discuss marketing marketing strategy and discuss marketing management orientations that guide marketing management orientations that guide marketing strategy.strategy.
4.4. Discuss customer relationship management and Discuss customer relationship management and strategies for building lasting customer strategies for building lasting customer relationships.relationships.
5.5. Describe the major trends and forces that are Describe the major trends and forces that are changing the marketing landscape in this new age changing the marketing landscape in this new age of relationships.of relationships.