lecture-3 mgt301 principles of marketing. summary of lecture-2

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MGT301MGT301Principles of MarketingPrinciples of Marketing

SummarySummaryof of

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Road MapRoad Map Understanding Marketing and Marketing ProcessUnderstanding Marketing and Marketing Process Core Marketing ConceptsCore Marketing Concepts

Core Marketing ConceptsCore Marketing Concepts

Needs

Markets

Transactions

Wants

Demands

Exchange Products

Today’s TopicsToday’s Topics

Marketing Functions Marketing Functions

Customer Relationship ManagementCustomer Relationship Management

Marketing FunctionsMarketing Functions

Costs and Functions of Costs and Functions of MarketingMarketing

On the average, 50% of all product On the average, 50% of all product costs can be traced directly to costs can be traced directly to marketingmarketing

What does the customer receive in What does the customer receive in exchange for the 50% marketing exchange for the 50% marketing costs?costs?

UniversalMarketingFunctions

Information Buying

Risk Taking Selling

Financing Transporting

Standardizingand Grading Storing

MarketingFunctions

Eight Universal Marketing Eight Universal Marketing FunctionsFunctions

1. Buying

2. Selling

3. Transporting

4. Storing

5. Standardizing and grading

6. Financing

7. Risk Taking

8. Securing Marketing Information

Marketing ManagementMarketing Management

Marketing management is “the art and science of Marketing management is “the art and science of choosing target markets and building profitable choosing target markets and building profitable relationships with them.”relationships with them.” Creating, delivering and communicating superior Creating, delivering and communicating superior

customer value is key.customer value is key.

DemarketingDemarketing

……Marketing to reduce demand temporarily or Marketing to reduce demand temporarily or permanently; the aim is not to destroy demand permanently; the aim is not to destroy demand but only to reduce or shift it.but only to reduce or shift it.

Relationship MarketingRelationship Marketing

The process of establishing and maintaining mutually The process of establishing and maintaining mutually beneficial exchange relationships with customer and beneficial exchange relationships with customer and other stakeholdersother stakeholders

Two components:Two components:

Customer FocusCustomer Focus

Competitive AdvantageCompetitive Advantage

Change In PerspectiveChange In Perspective

Yesterday: Here is this great product. Don’t you Yesterday: Here is this great product. Don’t you want to buy it?want to buy it?

Today: Here is what I need. Can you make it?Today: Here is what I need. Can you make it?

Direct Marketing ChannelsDirect Marketing Channels

Ways to market to your customers on a one-to-one Ways to market to your customers on a one-to-one basisbasis– Face-to-face channelsFace-to-face channels– Direct MailDirect Mail– CatalogCatalog– TelemarketingTelemarketing– On-line marketingOn-line marketing

Customer Focused MarketingCustomer Focused Marketing

Basic Philosophy:Basic Philosophy:– It is more profitable to keep loyal It is more profitable to keep loyal

customers than to constantly be customers than to constantly be attracting new onesattracting new ones

Lifetime Value of a CustomerLifetime Value of a Customer

..the revenues and intangible benefits (referrals, ..the revenues and intangible benefits (referrals, customer feedback, etc.) that a customer brings to the customer feedback, etc.) that a customer brings to the seller over an average lifetime in the category, less seller over an average lifetime in the category, less the amount the company must spend to acquire, the amount the company must spend to acquire, market to, and service the customer.market to, and service the customer.

Customer Focused MarketingCustomer Focused Marketing

How do I go about increasing the average lifetime How do I go about increasing the average lifetime value of my customers?value of my customers?

1.1. Identify your most valuable customers Identify your most valuable customers

2.2. Build a learning relationships with them so you Build a learning relationships with them so you can…can…

3.3. Provide a sustainable advantage over your Provide a sustainable advantage over your competition (Create Valuecompetition (Create Value))

Customer Relationship Customer Relationship Management Management

CRMCRM

CRM – Customer relationship CRM – Customer relationship

management . . .management . . .“is the overall process of building and “is the overall process of building and

maintaining profitable customer relationships by maintaining profitable customer relationships by

delivering superior customer delivering superior customer

value and satisfaction.”value and satisfaction.”

……the new view is that marketing is the science and the new view is that marketing is the science and art of finding, retaining, and growing profitable art of finding, retaining, and growing profitable customers.customers.

CRMCRM

It costs 5 to 10 times MORE to attract a new customer It costs 5 to 10 times MORE to attract a new customer than it does to keep a current customer satisfied.than it does to keep a current customer satisfied.

Marketers must be concerned with the lifetime value of Marketers must be concerned with the lifetime value of the customer.the customer.

Relationship building blocks: Customer value and Relationship building blocks: Customer value and SatisfactionSatisfaction

What is CRM?What is CRM?

Strategies focused on Strategies focused on increasing customer increasing customer satisfaction, loyalty, and satisfaction, loyalty, and profitability by leveraging profitability by leveraging superior customer knowledge superior customer knowledge acquired, stored, and acted acquired, stored, and acted upon with the aid of upon with the aid of information technologyinformation technology

What are the goals of CRM?What are the goals of CRM?

The idea of CRM is that it helps businesses use The idea of CRM is that it helps businesses use technology to gain insight into the behavior of technology to gain insight into the behavior of customers and the value of those customers. If it works customers and the value of those customers. If it works as hoped, a business can: as hoped, a business can:

Provide better customer service Provide better customer service

Make call centers more efficient Make call centers more efficient

Help sales staff close deals faster Help sales staff close deals faster

Simplify marketing and sales processes Simplify marketing and sales processes

Discover new customers Discover new customers

Value of LoyaltyValue of Loyalty

Firms have realized the value of customer Firms have realized the value of customer retention --retention --

Facts:Facts: Winning a new customer is usually 5- 10 times Winning a new customer is usually 5- 10 times

more costly than retaining an existing customermore costly than retaining an existing customer Customers are usually more profitable the longer Customers are usually more profitable the longer

you keep them.you keep them. Why?Why?

The Value of Loyalty GoesThe Value of Loyalty GoesBeyond Single CustomersBeyond Single Customers

Loyal customers provide Loyal customers provide more and more credible more and more credible referralsreferrals

But the angry gossip of But the angry gossip of disloyal customers can disloyal customers can devastate a firm!devastate a firm!

The Bottom LineThe Bottom Line

A 5% decrease in churn (customer A 5% decrease in churn (customer turnover) can increase profits turnover) can increase profits immensely (25-95%)immensely (25-95%)

It is clear that developing and It is clear that developing and retaining customer relationships is retaining customer relationships is a key to competitive success and a key to competitive success and profitability!profitability!

Let’s stop it

here

Let’s stop it

here

SummarySummary

UniversalMarketingFunctions

Information Buying

Risk Taking Selling

Financing Transporting

Standardizingand Grading Storing

MarketingFunctions

DemarketingDemarketing

……Marketing to reduce demand temporarily or Marketing to reduce demand temporarily or permanently; the aim is not to destroy demand permanently; the aim is not to destroy demand but only to reduce or shift it.but only to reduce or shift it.

Customer Relationship Customer Relationship Management Management

Loyal customers provide Loyal customers provide more and more credible more and more credible referralsreferrals

But the angry gossip of But the angry gossip of disloyal customers can disloyal customers can devastate a firm!devastate a firm!

Customer Relationship Management (CRM)Customer Relationship Management (CRM) Using information about customers to create Using information about customers to create

marketing strategies that develop and sustain marketing strategies that develop and sustain desirable customer relationshipsdesirable customer relationships

Identifying buying-behavior patterns of Identifying buying-behavior patterns of customerscustomers

Using behavioral information to focus on the Using behavioral information to focus on the most profitable customersmost profitable customers

Next….Next….

Marketing in Historical perspective and Marketing in Historical perspective and Evolution of MarketingEvolution of Marketing

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MGT301MGT301Principles of MarketingPrinciples of Marketing