MGT301

Principles of Marketing

Lecture-3
Summary
of
Lecture-2
 Road Map
 Understanding Marketing and Marketing Process
 Core Marketing Concepts
Core Marketing Concepts
 Needs
Markets Wants

Transactions Demands

Exchange Products
Today’s Topics
 Marketing Functions
 Customer Relationship Management
Marketing Functions
Costs and Functions of Marketing
 On the average, 50% of all product
costs can be traced directly to
marketing
 What does the customer receive in
exchange for the 50% marketing
costs?
 Information Buying

Risk Taking Selling

Universal
Marketing
Marketing
Functions
Functions
Financing Transporting

Standardizing
and Grading
Storing
 Eight Universal Marketing Functions

1. Buying
2. Selling
3. Transporting
4. Storing
5. Standardizing and grading
6. Financing
7. Risk Taking
8. Securing Marketing Information
 Marketing Management
 Marketing management is “the art and science of choosing target
markets and building profitable relationships with them.”
 Creating, delivering and communicating superior customer

value is key.
 Demarketing

 …Marketing to reduce demand temporarily or permanently;

the aim is not to destroy demand but only to reduce or shift it.
 Relationship Marketing

 The process of establishing and maintaining mutually beneficial

exchange relationships with customer and other stakeholders
 Two components:
 Customer Focus
 Competitive Advantage
 Change In Perspective

 Yesterday: Here is this great product. Don’t you want to buy it?
 Today: Here is what I need. Can you make it?
 Direct Marketing Channels

Ways to market to your customers on a one-to-one basis

– Face-to-face channels
– Direct Mail
– Catalog
– Telemarketing
– On-line marketing
 Customer Focused Marketing

Basic Philosophy:
– It is more profitable to keep loyal customers than to
constantly be attracting new ones
 Lifetime Value of a Customer

..the revenues and intangible benefits (referrals, customer feedback,

etc.) that a customer brings to the seller over an average lifetime in
the category, less the amount the company must spend to acquire,
market to, and service the customer.
 Customer Focused Marketing

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

customers?
1. Identify your most valuable customers
2. Build a learning relationships with them so you can…
3. Provide a sustainable advantage over your competition
(Create Value)
Customer Relationship
Management
 CRM

CRM – Customer relationship management . . .

“is the overall process of building and maintaining profitable
customer relationships by delivering superior customer
value and satisfaction.”

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

 It costs 5 to 10 times MORE to attract a new customer than it does to

keep a current customer satisfied.
 Marketers must be concerned with the lifetime value of the customer.
 Relationship building blocks: Customer value and Satisfaction
 What is CRM?
 Strategies focused on increasing
customer satisfaction, loyalty, and
profitability by leveraging superior
customer knowledge acquired,
stored, and acted upon with the aid
of information technology
What are the goals of CRM?
 The idea of CRM is that it helps businesses use technology to gain
insight into the behavior of customers and the value of those
customers. If it works as hoped, a business can:
 Provide better customer service
 Make call centers more efficient
 Help sales staff close deals faster
 Simplify marketing and sales processes
 Discover new customers
 Value of Loyalty

 Firms have realized the value of customer retention --

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

than retaining an existing customer

 Customers are usually more profitable the longer you keep

them.
 Why?
The Value of Loyalty Goes
Beyond Single Customers
 Loyal customers provide more  But the angry gossip of disloyal
and more credible referrals customers can devastate a firm!
 The Bottom Line

 A 5% decrease in churn (customer turnover)

can increase profits immensely (25-95%)
 It is clear that developing and retaining
customer relationships is a key to
competitive success and profitability!
 er e
it h
t op
s s
e t’
L
Summary
 Information Buying

Risk Taking Selling

Universal
Marketing
Marketing
Functions
Functions
Financing Transporting

Standardizing
and Grading
Storing
 Demarketing

 …Marketing to reduce demand temporarily or permanently;

the aim is not to destroy demand but only to reduce or shift it.
Customer Relationship
Management
 Loyal customers provide more  But the angry gossip of disloyal
and more credible referrals customers can devastate a firm!
 Customer Relationship Management (CRM)
 Using information about customers to create marketing strategies
that develop and sustain desirable customer relationships
 Identifying buying-behavior patterns of customers

 Using behavioral information to focus on the most profitable

customers
 Next….

 Marketing in Historical perspective and Evolution of Marketing

 MGT301
Principles of Marketing

Lecture-3