Chapter 1: Marketing, Managing Profitable Customer Relationships

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

Marketing means managing markets to bring about profitable customer relationships.

Needs
Human needs are states of felt deprivation. There are three types of needs; physical, social, individual.
Wants
Needs shaped by culture and personality. (Wants can be described as objects that will satisfy needs.)

Ex. A Hungry person needs food but may want a burger.

Demands
“wants” thats are acked by buying power.

Ex. The difference between flying business class and flying with a private jet.

Marketing Offering
This is a combination of products, services, information or experiences offered to the market to satisfy a need or want.

Ex. 1. Banking, airlines, hotels,
Ex 2. The International Red Cross
–> health education.

Marketing Myopia
Is a mistake of paying to much attention to the actual product (companies needs) a company has to offer than to the benefits and experience produced by those products (customers wants) .

Ex. 1. Kodak’s focus was on film instead of the digital technology … allowing competing companies (Sony, Nikon) to dominate the digital technology market.
Ex. 2. You wouldnt market a “cruise trip” saying here’s a boat, purchase a ticket. INSTEAD you would focus the marketing on the experience you will have while traveling on a cruise trip to for example. greece. YOU focus on marketing an experience.

Exchange
Is an act of obtaining a desired object from someone by offering something in return.

Ex. Someone purchasing a cup of coffee will EXCHANGE money to, in return get a cup of coffee.

Market
Is a set of actual and potential buyers of a product.
Marketing Management
This is the art & science of choosing target markets and building profitable relationships with them.

1. What customers we serve.
2. How can we serve these customers best.

This can be simply described as customer management and demand management.

Production Concept
This is the idea that if the goods/services are cheap and they can be made available at many places, there cannot be any problem regarding sale. These companies put in all their marketing efforts in reducing the cost of production and strengthening their distribution system.

Ex. The Ford – T model.

FOCUS: production efficiency.
RISK: marketing myopia.

Product Concept. “make & sell”
This is the idea that consumers will favour the products that offer the most quality, performance and features.

FOCUS: continuous improvement on products..
RISK: marketing myopia.

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

Ex. Insurance policy’s, donating blood.
FOCUS: to sell what the company makes, NOT what the consumer wants.

Marketing Concept
This is the idea that achieving organisational goals depends on knowing the needs and wants of target markets and delivering the desired satisfaction better than competitors do.

FOCUS: on customer focus and value, responding to customers desires and needs.

Societal Marketing Concept
This is the idea that a company should make good marketing decisions by considering consumers wants, company’s requirements, consumer long – term interests & society’s long – term interests.

Ex. Fast food industry.
FOCUS: to find and keep a healthy balance between,
– want satisfaction (consumer)
– profits (company)
– human welfare (societal)

Customer Relationship Management
Norminally to do with the process of creating, developing and maintaining relationships with customers, more typically and accurately referring to the management and use of customer information in databases.
Customer Perceived Value
The customer’s evaluation of the difference between all the benefits and all the costs of a marketing offer relative to those of competing offers.

A customer is likely to buy from a firm who has the highest customer perceived value (CPV).

Ex. Cars.
Consumers will compare the value of product A with product B, they will select the brand which gives them the greatest perceived value.

Customer Satisfaction
The extent to which a product’s perceived performance matches a buyer’s expectations.

FOCUS: The key is to match customer expectation with company’s performance.

Partner Relationship Management
Working closely with partners in other company departments and outside the company in order to bring greater value/service to customers.

FOCUS: To build strong management relationships in order to bring about greater customer value & relationships.

Share of Customer
The portion of the customer’s purchasing that a company gets in it’s product categories.

Ex. Amazon. originally an online book seller, amazon now offers customers music, films, toys. They also recommend products based on previous purchase history.
FOCUS: To increase company’s share of customer.

Customer Lifetime Value
The value of the entire stream of purchases that the customer would make over a lifetime. Often quoted as an amount lost to the company if the customer disappears.
Customer Equity
The total combined customer lifetime values of all the company’s customers.

This needs tobe strong so that you can always trust them to come back.

The more loyal the firm’s customers are the higher the firm’s customer equity.

Ex. Brands, Cars. Cadillac vs. BMW.

Internet
A public web of computer networks, which connects users of all types all around the world to each other and to an amazingly large ‘information library’.

The internet links individuals and businesses of all types to each other and to information all around the world.