This is a slide to tell us what is marketing

1. What is Marketing?
(Chapter 1)

2. Objectives

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To define marketing and outline steps in
marketing process.
To explain the importance of understanding
customers, and to identify the core
marketplace concepts.
To identify key elements of a customerdriven marketing strategy and the
marketing management orientations.
To discuss customer relationship
management.
2

3. Marketing: Managing profitable
customer relationships
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




What is Marketing?
Understanding the Marketplace and
Customer Needs
Designing a Customer-Driven
Marketing Strategy
Preparing an Integrated Marketing
Plan and Program
Building Customer relationships
Capturing Value from Customers
3

4. What is Marketing?

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
Real Marketing around us
Marketing definition
Five steps in Marketing process
4

5. Real Marketing around us

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Where is marketing? Shopping malls?
Super markets? TV commercials?
Magazines? Web pages?
What is Marketing in your opinion?
keywords? Selling? Advertising?
5

6. Real Marketing around us
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Why and how to do Marketing?
Successful companies know that if they
take good care of their customers, market
share and profits will follow.
Wal-mart, the world’s largest retailer,
“Always low prices, Always!”
Disney theme parks, “make a dream come
true today.”
Dell makes it easy for customers to design
their own “personal ”computers.
6

7. Marketing defined

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Rethink of the keywords: Management? Customer?
Relationships? Profit?
Marketing is managing profitable customer
relationships, or, the process by which companies
create value for customers and build strong customer
relationships in order to capture value from customer
in return.
selling and advetising are only the tip of marketing
iceberg- a set of marketing tools that work together
to satisfy customer needs and build customer
relationships.
7

8. The Marketing Process

In the first four steps to understand customers, to
create customer value, and to build strong customer
relationships. In the final step to capture value from
customers in turn.
Creat value for customers and build customer relationships
Understand the
Marketplace and
customer needs
and wants
Design a
Customer-driven
Marketing
strategy
Construct an
integrated
marketing program
that delivers
superior value
Build profitable
Relationships and
create customer
delight
Capture value from customers in return
Capture value from
customers to
create profits and
customer equity
FIGURE 1.1 A simple model of
marketing process
8

9. Marketing: Managing Profitable
Customer Relationships






What is Marketing?
Understanding the Marketplace and
Customer Needs
Designing a Customer-Driven
Marketing Strategy
Preparing an Integrated Marketing
Plan and Program
Building Customer relationships
Capturing Value from Customers
9

10. Understanding the Marketplace and
Customer Needs





Customer Needs, Wants, and
Demands
Market Offerings (Products, Services,
and Experinces)
Customer Value and Satisfaction
Exchange and Relationships
Markets
10

11. Customer Needs, Wants&Demands
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Needs: states 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.
Wants: the form human needs take as
shaped by culture and individual
personality. Needs for food, American V.S.
Chinese.
Demands: human wants backed by buying
power.
Consumer research is conducted, why?
11

12. Market Offerings

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Consumer’s needs and wants are fulfilled through a
market offering.
Market Offering: a certain combination of products,
services, information, or experinces offered to satisfy a
need or want.
Market myopia: the mistake of paying more attention
to the specific products a company offers than to the
benefits and experinces produced by these products.
Smart marketers look beyond the attributes of the
products and services they sell, but create brand
experinces for consumers.
“Consumers want more than attributes and benefits,
and even solutions. They want delightful shopping,
usage, and service experiences they look forward to,
time after time.”---A.G.Lafey, CEO of Procter&Gamble
12

13. Customer Value and Satisfaction

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How do Customers choose among
market offerings? Expectations are
formed about the value and
satisfaction that various market
offerings will deliver.
Marketers must be careful to set the
right level of expectations.
Customer value and customer
satisfaction are key building blocks
for developing and managing
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relationships.

14. Exchanges and Relationships


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Marketing occurs when people decide to satisfy
needs and wants through exchange
relationships.
Exchange: the act of obtaining a desired object
from someone by offering something in return.
Beyond simply attracting new customers and
creating transactions, the goal of marketing is
to retain customers and to maintain exchange
relationships.
Marketers want to build strong relationships by
consistently delivering superior customer
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value.

15. Markets



Market: the set of all actual and
potential buyers of a product or service.
Marketing means managing markets
to bring about profitable customer
relationships.
Activities such as product
development&research,
communication, distribution, pricing
and service are core marketing
activities.
15

16. 
suppliers
Company
(marketer)
Competitors
Marketing
intermediaries
Final users
Major environment forces
FIGURE 1.2 Elements of a modern
marketing system

All of the factors
in the system are
affected by major
environment
forces(demograph
ic, economic,
techlological,
polictical/legal,
social/cultural).
The arrows
represent
relationships that
must be
developed and
managed.
16

17. Marketing: Managing Profitable
Customer Relationships






What is Marketing?
Understanding the Marketplace and
Customer Needs
Designing a Customer-Driven
Marketing Strategy
Preparing an Integrated Marketing
Plan and Program
Building Customer relationships
Capturing Value from Customers
17

18. Designing a Customer-Driven
Marketing Strategy

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Two questions: Who(target market)?
How(value proposition)?
Selecting a customer to serve
Choosing a value proposition
Marketing management orientations


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The
The
The
The
The
production concept
product concept
selling concept
marketing concept
social marketing concept
18

19. Selecting Customers to Serve
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Marketing management: the art and science
of choosing target markets and building
profitable relationships with them.
Marketers must decide first who it will
serve, by dividing the market into
segments of customers(market
segmentation) and selecting which
segments it will go after(target marketing).
Simply put, marketing management is
customer management and demand
management.
19

20. Choosing a Value Proposition
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To decide how it will serve targeted
customer-how it will differentiate and
position itself in the marketplace.
A company’s value propostition is the set of
benefits or values it promises to deliver to
consumers to satisfy their needs.
Value propostitions differentiate one brand
from another, by answering the customer’s
question, “why should I buy your brand
rather than a competitor’s ?”
“it gives
20
you
wings!”

21. Marketing Management
Orientations(1/4)


What philosophy should guild to
design marketing strategies, for
example, how to put the weight of
interests of customers, the
organization, and society?
Five alternative concepts, the
production, product, selling,
marketing, and societal marketing.
21

22. Marketing Management
Orientations(2/4)
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Production Concept: the concept that consumers
will favor products that are available and highly
affordable and that the organization should
therefore focus on improving production and
distribution efficiency.
Product Concept: the idea that consumers will
favor products that offer the most quality,
perfomance, and features and that continuous
product improvements should be made.
Selling Concept: the idea that consumers will not
buy enough of the firm’s products unless it
undertakes a large-scale selling and promotion.

The aim often is to sell what the company makes
rather than making what the market wants.
22

23. Marketing Management
Orientations(3/4)

Marketing concpet: the philosophy of the
importance of knowing the needs and wants of
target markets and delivering the desired
satisfactions better than competitors do.
Table 1.1 Maketing orientations contrasted
Focus
Means
Ends
Older
orientations
Products
Production and
selling
Profits through
sales volume
Marketing
concept
Customer
needs
Integrated
marketing
Profits though
customer
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satisfaction

24. Marketing Management
Orientations(4/4)

Societal marketing concept: The principle
that maketing strategy should deliver value
to customers in a way that maintains or
improves both the consumer’s and the
society’s well-being.
Society(Human welfare)
Figure 1.4 Three
Considerations
underlying the
societal marketing
concept
Consumers(Want Satisfaction)
康菲石油中国有限公司
The oil leak was first
detected on June 4,
2011, but COPC and
Company(Profits) CNOOC remained silent
until the spill was
exposed to the public
24
by the media late in
July, 2011.

25. Marketing: Managing Profitable
Customer Relationships






What is Marketing?
Understanding the Marketplace and
Customer Needs
Designing a Customer-Driven
Marketing Strategy
Preparing an Integrated Marketing
Plan and Program
Building Customer relationships
Capturing Value from Customers
25

26. Preparing an Integrated Marketing
Plan and Program
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


An integrated Marketing program starts to
deliver the intended value and build
customer relationships by transforming the
marketing strategy into action.
The marketing program consists of the
firm’s marketing mix, the set of marketing
tools the firm uses to implement its
marketing strategy.
The major tools are called the four Ps of
marketing: product, price, place and
promotion.
The firm must blend these mix tools into a
comprehensive, integrated marketing
program that communicates and 26
delivers
the intended value to chosen customers.

27. Marketing: Managing Profitable
Customer Relationships






What is Marketing?
Understanding the Marketplace and
Customer Needs
Designing a Customer-Driven
Marketing Strategy
Preparing an Integrated Marketing
Plan and Program
Building Customer relationships
Capturing Value from Customers
27

28. Building Customer Relationships
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Customer Relationship Management
The changing Nature of Customer
Relationships
Partner Relationship Management
28

29. Customer Relationship
Management
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Relationship Building Block: Customer
Value and Satisfaction.
Customer Relationship Levels and
Tools
29

30. Relationship Building Blocks:
Customer Value and Satisfaction

Customer perceived value: customer’s evaluation of the
difference between all the benefits and all the costs of a market
offering relative to those of competing offers.
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Customer satisfaction:the extent to which a product’s perceived
performance matches a buyer’s expectations.


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Value proposition: intended value at the company’s side;
evaluation: subjective and personal; difference among;
How we make a purchase decision; select brand with greatest CPV.
an extent of match, between; highly satisfied and delighted;
Higher levels of CS lead to greater customer loyalty,better company
performance in turn.
CRM: process of building and maintaining profitable customer
relationships by delivering superior customer value & satisfaction.

“Superior”, two levels of meanings.
30

31. Customer Relationship Levels and
Tools

Companies build appropriate cumstomer
relationships at different levels, depending
on the nature of the market.

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low-margin customers, basic relationships;
high-margin customers, full partnerships.
There are tools developed for gaining
customer loyalty and retention, such as
frequency marketing program, club
marketing programs, etc..


Reward customers who buy frequently or in
large amounts.
Offer members special benefits and create
member communities.
31

32. Case: Bike Friday
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What did you learn from the story? What
does the story try to explain in the
language of Marketing?
What is the nature of the target market?
What kind of market offering does the
company provide? How does it differentiate
and position itself?
Why did the company decide to cultivate
the “community”? How did the company
cultivate its loyalty and brand?
Did the company benefit from its customer
delight? How?
32

33. Case: Bike Friday

What does the story try to explain in
terms of Marketing?
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How to create customer delight and build
customer relationships.
“brands need to be built for the long
haul”.
“Customer evangelism strategy has been
crucial to the company’s success”.
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34. 
What is the nature of the target market?


“40-something, well-heeled professionals
who travel extensively and cherish
personalized service”.
What kind of market offering does the
company provide? How does it
differentiate and position itself?



The unusual styling of the custom-fit, highend travel bikes;
Bike Friday bikes fold in seconds, pack into
airline suitcase, and ride like a full-size
performance bike.
Curiosity factor: a powerful way to reach
new customers.
34

35. 
Why did the company decide to cultivate the
“community”? Why is it important to its
success?



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Small company with small marketing budget;
Creating relationships and community makes sense,
given the nature of the company’s taget customer.
“We get key customers excited to be involved”, and
“They attract others and this create community”
How did the company cultivate its loyalty and
brand?




Bike clubs: 30 Clubs of America to generate referrals;
free to anyone, regardless of brands;
Newsletters & catalogs: pictures of happy owners
biking all over the world;
Web forums: “community” page welcomes new
owners; send photos and share travel stories; e-mail
discussion list creates interactions; 35
Referral rewards program: prepaid postage cards;

36. 
Did the company benefit from its
customer delight? How?


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Customer delight creates a voluntary
customer sales force;
1/3 of its 10,000 customers and 29% of
the company’s sales came from the
referral program;
“Our customers were our best
advertisers-if we made them happy”!
36

37. Building Customer Relationships
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Customer Relationship Management
The changing Nature of Customer
Relationships
Partner Relationship Management
37

38. The changing nature of customer
relationships(1/2)

Relating with more carefully selected
customers
 Yesterday’s companies practiced mass
marketing: selling in a standarlized way
to any customer who comes along.
 Companies now are targeting fewer,
more profitable customers: selective
relationship management.
 Once identifying profitable customers,
firms create attractive offers and special
handling to capture these customers
and earn their loyalty.
38

39. The changing nature of customer
relationships(2/2)

Relating for the long term
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Companies today face some new marketing
realities, changing demographics, more
sophisticated competitors, and overcapacity in
many industries.
On average, it costs 5 to 10 times to attract a
new customer as to keep a current customer
satisfied.
Firms are using CRM to retain current
customers and build profitable, long-term
relationships. The new view is that
marketing is the science and art of finding,
retaining, and growing profitable customers.
39

40. Building Customer Relationships

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
Customer Relationship Management
The changing Nature of Customer
Relationships
Partner Relationship Management
40

41. Partner Relationship
Management(1/2)


PRM: Working closely with partners in other
company departments and outside the company
to jointly bring greater value to customers.
Partners Inside the Company
 Rather than assigning only sales and
marketing people to customers, crossfunctional customer teams are needed,
and every employee must be customer
focused.
41

42. Partner Relationship
Management(2/2)

Marketing Partners Outside the Firm
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Supply chain management works to strengthen the
connections with partners along the supply chain
from raw materials to components to final products.

Companies may work with suppliers to improve
quality and operation efficiency, and with
distributors or retailers for service support.
Competitors work together for mutual benefit.
 From “if u can’t beat them, join them”, to “join
them and you can’t be beat”.
Strategic alliances is a relationship between two or
more parties to pursue a set of agreed goals or to
meet a critical business need while remaining
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independent organizations.

43. Marketing: Managing Profitable
Customer Relationships






What is Marketing?
Understanding the Marketplace and
Customer Needs
Designing a Customer-Driven
Marketing Strategy
Preparing an Integrated Marketing
Plan and Program
Building Customer relationships
Capturing Value from Customers
43

44. Capturing Value from Customers

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
The outcome of creating customer
value: customer loyalty and retention,
share of customer, and customer
equity.
Creating Customer Loyalty and
Retention
Growing Share of Customer
Building Customer Equity
44

45. Creating Customer Loyalty and
Retention


Even a slight drop from complete
satisfaction can create an enormous drop in
loyalty, which result in losing a customer.
Customer lifetime value: the value of the
entire stream of purchases that a customer would
make over a lifetime of patronage.


Assessing customer lifetime value makes sense that
working to retain and grow customers makes good
economic sense.
The aim of CRM is to create not just
customer satisfaction, but customer delight
which results in customer loyalty and brings
good company performance.

How to keep customer coming back---Rule 1: The
customer is always right; Rule 2: If the customer is
45
ever wrong, reread Rule 1!---Stew Leonard.

46. Growing Share of Customer


Share of customer: the portion of the customer’s
purchasing that a company gets in its product categories.
 Share of wallet, share of stomach, etc..
To increase the share of customers, firms can offer
greater variety to current customers, or cross-sell and
up-sell in order to market more products and services
to existing customers.
 Cross-sell: to provide existing customers the
opportunity to purchase additional (complemental)
items offered by the company.
 Up-sell: to induce the customer to purchase more
expensive items, upgrades or other add-ons.
46

47. Building Customer Equity


Companies want not only to create
profitable customers, but to “own” them for
life, and that comes to Customer Equity.
What is Customer Equity?



CE: the total combined customer lifetime values of
all the company’s customers.
The ultimate aim of CRM is to produce high
customer equity.
Customer equity is a better measure of a firm’s
performance than current sales or market share.
47

48. 
Building the right relationships with
the right customers

Different types of customer require different
relationship management strategies. The goal
is to build right relationships with right
customers.
Potential profitability
Butterflies: Good fit
between offerings and
customer’s needs; high
High
profit potential
profitability -Create profitable
transactions and cease
investing next round.
True friends: Good fit
between company’s
offerings and customer’s
needs; highest profit
potential
-Continuous relationship
investment
Strangers: Little fit
between offerings and
profitability customer’s needs;
lowest profit potential
-No investment
Barnacles: Limited fit
between offerings and
customer’s needs; low
profit potential
-Problematic; Improve
profitability or “fire”
low
Short-term customers
long-term customers
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Projected loyalty
Figure 1.5
Customer
relationship
groups

49. What is Marketing?Pulling it all
together


Marketing is the process of building
profitable customer relationships by
creating value for customers and capturing
value in return.
The first 4 steps of the marketing process
focus on creating value for customers. In
the final step, the company reaps the
rewards of its strong customer relationships
by capturing value from customer.
49

50. Create value for customer and build customer relationships
Understanding
maprketplace
and customer
needs
and wants
Design a
customer-driven
marketing
strategy
Research
customers and
marketplace
Select
customers:
market
segmentation
and targeting
Manage
marketing
information
and
customer data
Decide on a
value
proposition:
differentiation
and positioning
Figure 1.5 An expanded model of
the marketing process
Construct an
integrated
marketing
program
that delivers
supurior value
Product and
service design
-build strong
brands
Pricing
-create
real value
Distribution
-manage
demand and
supply chains
Promotion
-communicate
the value
propostition
Capture value
from customer
in return
Build profitable
relationship
and
create customer
delight
Capture value
from customer
to create profits
and customer
equity
Customer
relationship
management
-build strong
relationships
with chosen
customers
Partner
relationship
management
-build strong
relationships
50
with marketing
partners
Creat satisfied
loyal
customers
Capture
customer
lifetime value
Increase
share of
market and
share of
customer

51. 




The company first gains a full understanding of the
marketplace by researching customer needs and
managing marketing information.
Design a customer-driven strategy by answering,
“what consumers will we serve?”(market
segmentation and targeting) and “how can we best
serve targeted customer?”(differentiation and
positioning)
Construct an integreated marketing program-4Ps
Build value-laden profitable relationships with
target customers(CRM for customer satisfaction
and delight).
Reap the rewards of strong customer relationships
by capturing value from customers, resulting in
51
increased long-term customer equity for the firm.

52. Objectives achieved?




To define marketing and outline steps in
marketing process.
To explain the importance of understanding
customers, and to identify the core
marketplace concepts.
To identify key elements of a customerdriven marketing strategy and the
marketing management orientations.
To discuss customer relationship
management.
52

53. Reviewing the Key Terms



Customer equity, Customer lifetime value,
Customer perceived value, Customer
relationship management, Customer
satisfaction, Demands, Exchange
Market, Marketing, Marketing Concept,
Marketing Management, Marketing myopia,
Marketing offering, Needs,
Partner relationship management, Product
Concept, Production concept, Selling
concept, Share of customer, Social
Marketing Concept, Wants
53