A company's value proposition is the set of benefits or values it promises to deliver to The purpose of marketing is to generate customer value profitably. i. Marketing: Managing Profitable Customer Relationships Chapter 1 1 . Capture value from customers to create profits and customer quality Marketers select customers that can be served profitably Value Proposition How. The Marketing Process Create value for customers and build customer proposition Set of benefits or values it promises to deliver to customers to satisfy their.
Ask them how many people they informed when dissatisfied vs.Principles of Marketing Lesson 1 #3 - Building Customer Relationships
You can also introduce perceived value here. It is also useful on the third question to talk about research and understanding needs, the difficulty in managing costs while delivering quality.
What customers will we serve? How can we serve these customers best? Known as customer management Marketers select customers that can be served profitably How can we serve these customers best?
What need or want does it fulfill? What is its marketing offer? What is its value proposition? Is it a strong value proposition for its target market? Firms are linking all their departments in the cause of creating customer value. Most companies today are networked, relying heavily on partnerships with other firms. Managing Profitable Customer Relationships r. The supply chain describes a long channel, stretching from raw materials to components to final products that are carried to final buyers.
Through supply chain management, many companies today are strengthening their connections with partners all along the supply chain. Use Real Marketing here.
Capturing Value from Customers a. The final step in the marketing process involves capturing value from the customer, in the form of current and future sales, market share, and profits. Creating Customer Loyalty and Retention b. The aim of customer relationship management is to create not just customer satisfaction, but customer delight.
Companies are realizing that losing a customer means losing more than a single sale. It means losing the entire stream of purchases that the customer would make over a lifetime of patronage. This is called customer lifetime value. Customer delight creates an emotional relationship with a product or service, not just a rational preference.
Use Applying the Concepts 3 here. Growing Share of Customer e. To increase the share of customer, firms can leverage customer relationships by offering greater variety to current customers. Or they can train employees to cross-sell and up-sell in order to market more products and services to existing customers. Use Key Term Share of Customer here.
Chapter 1 Marketing: Managing Profitable Customer Relationships
Building Customer Equity g. The company can classify customers according to their potential profitability and manage its relationships with them accordingly. Each group requires a different relationship management strategy. Strangers show low profitability and little projected loyalty.
Butterflies are profitable but not loyal. True friends are both profitable and loyal. Defining Marketing and the Marketing Process iv.
Chapter 1 Marketing: Managing Profitable Customer Relationships - ppt download
Barnacles are highly loyal but not very profitable. Use Chapter Objective 4 here. Use Real Market here. Use Discussing the Concepts 5 here. Use Applying the Concepts 2 here. The New Marketing Landscape a. Dramatic changes are occurring in the marketplace; there are five major developments.
The New Digital Age b. The technology boom has created exciting new ways to learn about and track customers, and to create products and services tailored to individual customer needs. Technology is also helping companies to distribute products more efficiently and effectively. Perhaps the most dramatic new technology is the Internet.
Internet penetration in the United States has reached 63 percent, with more than million people accessing the Web in any given month.
The number of Internet users worldwide reached million last year and is expected to approach 1. Use Key Term Internet here. Use Discussing the Concepts 6 here.
Use Focus on Technology here. Many marketers are now connected globally with their customers and marketing partners. Almost every company, large or small, is touched in some way by global competition. Companies are not only trying to sell more of their locally produced goods in international markets, they are also buying more supplies and components abroad. Marketers are re-examining their relationships with social values and responsibilities and with the very earth that sustains us. Use Focus on Ethics here.
Marketing has become a major part of the strategies of many not-for- profit organizations.
Government agencies have also shown an increased interest in marketing. The New World of Marketing Relationships o. Modern marketing companies are improving their customer knowledge and customer relationships. Use Chapter Objective 5 here.
So, What Is Marketing? Pulling It All Together a. With its marketing strategy decided, the company now constructs a marketing program—consisting of the four marketing mix elements, the 4 Ps. Perhaps the most important step in the marketing process involves building value-laden, profitable relationships with target customers.
You can define marketing and its functions in many ways. In your own words, explain marketing to someone who has not yet read this chapter. Students should talk about customers and managing profitable customer relationships.
Marketing: Managing Profitable Customer Relationships
They might include the fact that a marketer must attract new customers and keep and grow current customers by delivering satisfaction. Some students will go right to the definition of marketing as a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging value with others.
Still other students will run through the marketing process. If they take this approach, they should highlight the fact that the process includes understanding customer needs, designing a marketing strategy, constructing a marketing program, building profitable relationships, and then capturing value. What is the difference between a need, a want, and a demand? Describe the need versus the want for the following products: Gatorade, Nike, and iPod. Defining Marketing and the Marketing Process The need is a state of felt deprivation, which is physical, social, or individual.
A want is the form the needs take as they are shaped by culture. For Gatorade, there is a physical need for hydration, and the consumer wants a Gatorade. For Nike, the need is a physical need for clothing or the psychological need for status. For an iPod, the need is more individual, one for self-expression. What are the five different marketing management orientations?
Which orientation do you believe your college follows when marketing its undergraduate program? Students will list the production, product, selling, marketing, and societal marketing concepts. Many students at a large state school might feel a bit of the production concept, since the school provides affordable education for a large number of students. If a school tends to market very innovative programs and markets itself on its high standings and selectivity, students might see their college as following the product concept.
Marketing: Managing Profitable Customer Relationships
The selling concept might come through if students feel their school has a strong recruitment program that reaches many high school students. Students might mention the marketing concept if they feel the school is customer driven and bases its programs and offerings on student feedback. A few students might mention the societal marketing concept if their schools offer programs or research that really helps society.
When consumers order a t-shirt from an online retailer like landsend. Students should talk about benefits of buying online. They might mention the ease of ordering, the ease of payment, and the large assortment.
The first cost they mention might be payment, which includes shipping. Students should also realize that time is a cost and they are minimizing this cost by purchasing online.
Some might even see the loss of privacy as a cost. What is customer equity? How can a company increase its customer equity? Students may be confused by this statement. You might use the case of the local grocery store. But they spend this amount every week. But what if they graduate and stay in 10 Chapter 1: Managing Profitable Customer Relationships the area and continue to shop at the same store?
You can add this for as many years as you like— it helps them get the point. The grocery should have programs in place to increase loyalty—each customer is worth a lot! Companies can increase their equity by increasing loyalty, and they should work constantly to attract customers with high profitability and expected long-term potential.
How has the Internet changed consumers? We are all connected now and information travels faster. Marketers also can send information to the marketplace faster. In addition, marketers can now track their customers and their marketing efforts to a deeper level. On the downside for marketers, much product information is no longer controlled by the marketer.
Blogs, for example, are increasing and can influence brands in strongly positive or negative ways. Applying the Concepts 1. When companies have close competitors, they try to choose value propositions that will differentiate them from others in the market. Choose three fast-food restaurants and describe their value propositions. Are they strongly differentiating themselves? Have students focus on the set of benefits that the restaurants promise to deliver.
Encourage them to talk about different target markets that a restaurant might have and how the value propositions might differ. Some restaurants focus more on price and offer large servings at lower prices. However, it has recently changed to a more healthy value proposition for several of its target markets.
Some might offer the benefit of great food, ethnic specialty, and fast delivery. For instance, Domino Pizza had the value proposition of speedy delivery for years.
It might be interesting to talk to students about the many accidents the drivers encountered and whether this was a program that was good for society in general. What are the four customer relationship groups? Is there a way marketers can move a Stranger to True Friend? Ask students to think back about value propositions and customer value. Perhaps a company could increase the benefits or reduce the costs. For instance, many marketers of designer products are attracting new customers with their lower cost luxury goods—coach and BMW have both done this in recent years.
Defining Marketing and the Marketing Process brought in customers with its lower priced iPod Shuffle. Some marketers are adding benefits to improve the fit between the product and the consumer—many hotels have started offering Internet access in the room for business travelers. One chain even has brown bag breakfasts for business people on the go.
Colleges and universities often offer new programs to provide a benefit for a new group of students. What is the Customer Lifetime Value of this user to the cell phone company?
Although this CLV calculation is relatively simple when computed at the portfolio level, it can become very complicated when calculated on an individual customer basis.
A single customer may come and go on several occasions over a lifetime with a firm. Other factors that complicate the issue are margin variations based on mix, operational activities, and even the economy.
Focus on Technology Visit www. The characters, referred to as VHosts, help customers navigate the site and find important information. A VHost can be set up to speak any one of 64 languages and to have a variety of facial characteristics, skin tones, and hair styles. What is the appeal of the vHost for a marketer? A vHost helps with the customer experience and customer service.
This should increase the customer perceived value and help with customer relationship management. In addition, it might increase the loyalty of the consumer since there is now a face with the brand.
What might be a concern for the marketer? Since marketers choose target markets, putting a face on their brand may alienate those who do not relate to the character. For instance, if younger women are your target, you would choose a vHost who is young.
But this will keep away any additional sales from a slightly older customer. After visiting the site, as a consumer, what are your thoughts regarding the vHosts? It is probably because they do not feel they need navigation help or that the information comes to them too slowly verbally; they would rather read.
What specific target markets might benefit most from a vHost? The students might question who would perceive the vHost as a benefit—who needs navigational help? Most likely there are some older targets. Consider a Web site for a pharmaceutical product for older people—perhaps arthritis.
Also, small kids might enjoy a vHost at candy and toy sites to show them through the games available on the Web site. Divide the market into segments of customers Target Marketing: Select the segment to cultivate 22 Interactive Student Assignment Chapter 1 Pair up with another student and share your thoughts with one another on the following items: To what market segments do you think you belong?
What personal traits, variables, or factors characterize you as belonging to those segments? Temporarily or permanently reducing the number of customers or shifting their demand. Demarketing 24 It cleans and freshens like sunshine! Value Proposition The set of benefits or values a company promises to deliver to consumers to satisfy their needs. It cleans and freshens like sunshine! Marketers must often understand customer needs even better than customers themselves do.
Based on your personal experience, discuss with your partner ways you have seen organizations implement the societal marketing concept. It promises reliability, speed, and peace of mind.
Share of Customer The share a company gets of the customers purchasing in their product categories. Rule 2—if the customer is ever wrong, reread Rule 1. By, companies will use the Internet to do business.