Fundamentals of Marketing - Customer Relationships and Marketing Strategy

Marketing is managing profitable customer relationships. GOALS of marketing: 1) attract new customers by promising superior value, 2) keep and grow current customers by delivering customer satisfaction. Model of marketing process: understand the marketplace and customer needs/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 customer to create profit/customer equity. Customer equity: when a customer is loyal and trusts you. EXAMPLE: terry esper loves apple, said about the ipad before it released, “I don’t know what it does, but im getÝng one!” Need: state of felt deprivation; can be physical (food, shelter, clothing), social (belonging, affection), individual (learning, self-exploration, knowledge). Dr. Moon needs a new putter, but wants a fancy expensive putter. Wants: a form of a need that takes shape of culture, individual personality, and marketing activity. Demands: wants + buying power (money). Not all wants represent real demand Needs/wants are fulfilled through a marketing offer: some combo of products, services, information, or experiences offered to a market to satisfy a need/want. What is a market? The set of actual or potential buyers of a product/service. 2 questions a marketing managers has to address: 1) what customers will we serve? (who is in our target market?) 2) How can we best serve these customers? (what is our value proposition?). Answered through tasks of market segmentation (dividing the market into segments of customers) + targeting (select the segment to cultivate). Value proposition: the set of benefits or values that a company promises to deliver to consumers to satisfy their needs. EXAMPLE: what does BMW offer its customers? Cars, quality, luxury, performance. Their slogan is a “benefit” offered. Marketing managers also have to figure out how to execute their strategy… using a marketing mix 4 P’s – product, price, promotion, place. Customers are at the center of the universe for marketing. Customer value is ever changing, organize what we do as a company around delivering customer value (EXAMPLE: Eastman Chemical changed what they did in order to make what customers wanted more important) CUSTOMERS DO NOT BUY PRODUCTS: they buy ways to solve problems and achieve wants. Questions that managers ask: 1) What is important to our customers? 2) How do I know if we are delivering value to our customers? 3) How do I judge whether we are offering superior value relative to competitors? Customer value: customer’s perception of what he/she wants to have happen in a specific use situation, with the help of a product or service, in order to accomplish a desired purpose or goal Customer value = importance Customer satisfaction = performance Satisfaction is about falling short or exceeding expectations 5 Aspects of Customer Value: 1) tradeoff of benefits and sacrifices, 2) Interaction of customer and product, 3) Relative to competitors, individuals, and situations, 4) Goal-driven by customer’s desired attributes, desired outcomes, and end goals, 5) Dynamic in that it changes over time. Benefits (what I get) – sacrifices (what I give up) = x (maximize X for customer) EXAMPLE: Mark totaled his car, bought a new one. The car was small, expensive to upkeep. The car model was a want based on Mark’s values and goals. Customer’s goals – peace of mind Customer’s desired consequences – what I want to happen firm controls product attributes What changes customer’s perceptions of value change? The environment (economy, trends), consumers: life changes, changes from other companies Intel sells to samsung (they have to worry about samsung’s wants), Samsung worries about its customers wants (best buy, other intermediaries). Customer value learning: value hierarchies, value maps, customer interaction (calls), customer research (interviews, panels, surveys), 3 rd party research (consultants), secondary reports (journals, industry reports), analyzing market trends, analyzing customer complaints, mine customer databases looking for buying patterns, market segments, changes in buying patterns. EXAMPLE: Kroger wants you to get a Kroger card (way of collecting data), Harrah’s casino wants you to get a customer card to collect data.) Customer value strategy process: identify the value, choose the values, provide the value, communicate the value, assess the delivered value Strategic Planning is the Process of Developing and Maintaining a __strategic fit_ Between the organizations goals and capabilities and Its changing market opportunities. Steps: 1)defining the company mission (mission statement), 2)setÝng company objectives and goals (translate the mission into supporting objectives for levels of management), 3) designing the business portfolio (the collection of businesses and products that make up a company), 4) planning marketing and other functional strategies. Mission statement answers: what is our business, who is our customer, what do our customers value, what should our business be. SBU (strategic business unit) – a unit of a company that has a separate mission and objectives and that can be planned independently, can be a company division, a product line within a division, or a single prod/brand. Portfolio – an evaluation of the products and businesses making up the company. STARS: high growth/share, may need investment to grow, growth eventually slows Question Marks: low share, high growth markets, requires cash to hold mkt share, build into stars or phase out Cash Cows: low growth, high share, established, produces cash Dogs: low growth, low share, generate cash to sustain, does not promise to be cash source Market Penetration: make more sales to current customers, same products Market Development: identify/develop new markets for current products Product Development: offer modified or new products to current markets Diversification: start up or buy businesses outside current products and markets Marketing provides a guiding philosophy, inputs to strategic planners The marketing mix consists of the 4 P’s: the set of controllable tactical tools that marketers blend to produce the response it wants from the target market.