TOPIC 1

CHAPTER 1
Managing Profitable
Customer Relationships

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Main Text : Armstrong G., and
Kotler P., (2015) Marketing: An
Introduction (12th Edition), Boston:
Pearson Education

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Methods of Assessment Total
1. Continuous Assessment
A) Group Assignment 25%
i) Assignment /Quiz 15%
ii) Presentation 10%
B) Mid-Term Test 15%
40%
2. Final Examination 60%
Grand Total 100%
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 LEARNING OUTCOME

Explain the marketing concepts,

theories and strategies in
making effective and efficient
marketing decisions.

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1. Define marketing and the steps in the
marketing process.
2. Understand the five core marketplace
concepts.
3. Identify the marketing strategy and discuss
the marketing management orientations .
4. Discuss customer relationship
management and strategies for creating
value for customers and capturing value
from customers in return.

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Define marketing and the
steps in the marketing
process.

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 A simple definition of marketing is managing
profitable customer relationships.

HOW??????

Marketing must meet

both goals

A) Attracting NEW B) KEEPING and GROWING

customers by promising current customers by
superior value. delivering satisfaction.
(Eg: Get a voucher of RM10 (Eg: Get 10% discount for
for a new user - Lazada) member - Starbucks)

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 Many things can be marketed

Goods – Shoes

Services - Clinics

Events – Singing Consert

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 Many things can be marketed
Persons – Footballer

Places – Vacation

Properties – Houses, Shop lots,

Land, & etc.
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 A Simple Five (5) – Step Model of
the Marketing Process

Step 1 Step 2 Step 3 Step 4 Step 5

• In the first four steps, companies work to understand consumers, create

customer value, and build strong customer relationships.

• In the final step, companies reap the rewards of creating superior customer
value. By creating value for consumers, they in turn capture value from
consumers in the form of sales, profits, and long-term customer equity.
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Understand the five core
marketplace concepts.

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 Companies must first understand what are the
customer needs and wants, as well as the
marketplace in which they operate.

 Five (5) core customer & marketplace concepts:

1. Needs, wants, and demands;

2. Market offerings (products, services, and experiences)
3. Value and satisfaction
4. Exchanges and relationships
5. Markets (set of actual & potential buyers)

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 Identify the marketing
strategy and discuss the
marketing management
orientations .

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 Marketing management is defined as the art and
science of choosing target markets and
building profitable relationships with them.
 The marketing manager must answer two
important questions:

1. What customers will we serve

(what’s our target market)?

2. How can we serve these customers

best (what’s our value proposition)?
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 A company must decide who it will serve.

1. Dividing the market into

segments of customers
(market segmentation)

2. Selecting which segments it will go after

(target marketing).

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 A company’s value proposition is the set of
benefits or values it promises to deliver to
consumers to satisfy their needs.
 Eg: AirAsia“Now Everyone Can Fly”
 Such value propositions differentiate one
brand from another.

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 Marketing management wants to design
strategies that will build profitable relationships
with target consumers.

 There are five (5) alternative concepts under

which organizations design and carry out their
marketing strategies.

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 5 Alternative Concepts Descriptions

Production Concept
Consumers will favor products that are
(improve production &
available and highly affordable.
distribution efficiency)
Product Concept Consumers will favor products that offer
(continuous product the most in quality, performance, and
improvements) innovative features.
Consumers will not buy enough of the
Selling Concept
firm’s products unless it undertakes a
(unsought products)
large-scale selling and promotion effort.
Achieving organizational goals depends on
Marketing Concept
knowing the needs and wants of target
(customer value are path of
markets and delivering the desired
sales & profits)
satisfactions better than competitors do.
Marketing strategy should deliver value to
Societal Marketing Concept
customers in a way that maintains or
(maintain society’s well
improves both the consumer’s and the
being)
society’s well-being. 18
 1. The company’s marketing strategy outlines which customers the
company will serve and how it will create value for these customers.

2. Next, the marketer develops an integrated marketing program that

will actually deliver the intended value to target customers.
 The marketing program consists of the firm’s marketing mix,
the set of marketing tools (4Ps: product, price, place, and
promotion) the firm uses to implement its marketing strategy.
 The firm blends all of these marketing mix tools into a
comprehensive integrated marketing program that
communicates and delivers the intended value to chosen
customers.
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Discuss customer relationship
management and strategies for
creating value for customers
and capturing value from
customers in return

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 The first three steps lead up to this fourth step,
which is the most important step – building
profitable customer relationships.

(a) Customer relationship management is the

most important concept of modern marketing.

(b) Partner relationship management – inside

and outside the company.

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 A) Customer Relationship Management (CRM)

Process of building and maintaining profitable customer

relationships by delivering superior customer value and
satisfaction.

Customer value: Customer’s Customer satisfaction: Depends

evaluation of the difference between on the product’s perceived
all the benefits and all the costs of performance relative to a buyer’s
a market offering relative to those of expectations.
competing offers.
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 When it comes to creating customer value and building
strong customer relationships, today’s marketer know
they can’t do it alone.
 They need to work closely with a variety of marketing
partners.

B) Partner Relationship Management (PRM)

Marketers partner with others inside (employees in other

departments) & outside the company (distributor, supplier, retailer) to
jointly bring more value to customers.

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 The first four steps in the marketing process
outlined involve building customer relationships.

 Thefinal step involves capturing value in

return.

 Bycreating superior customer value, the firm

creates highly satisfied customers who stay
loyal and buy more.

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(A) Creating Customer (B) Growing Share of (C) Building
Loyalty and Retention Customer Customer Equity

Customer delight The share the company Companies want not only to
creates an emotional gets of customers create profitable customers,
relationship with a purchasing in their but to “own” them for life,
product or service. product categories. capture their customer
lifetime value, and earn a
(Talk to others about (They also buy other greater share of their
the company’s product categories purchases.
product) from the same (Customer lifetime value
company) & customer equity
suggests the future)
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Q1. The purpose of developing and
managing customer relationships is to
build ___________.

A. Organisation profit
B. Employee’s satisfaction
C. Product performance and customer
value
D. Customer value and customer
satisfaction
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Q2. Which of the following is NOT
included as a basic idea in the
definition of marketing concepts?

A. Total company effort

B. Profit
C. Productivity
D. Customer satisfaction

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STRUCTURED QUESTIONS

Q1. Based on what you have

learned, identify and explain the
TWO ways how a company can use
to increase its profitable customer
relationship by providing an
example for each of them.

(6 marks)
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YouTube

What is marketing?

https://www.youtube.com/watch
?reload=9&v=zAhfJdzCwV4

https://www.youtube.com/watch
?v=i1xz5Kv-7VY

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The End

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