1 MARKETING managing profitable customer relationship

MARKETING: Managing Profitable Customer RelationshipCOLLEGE OF BUSINESS ADMINISTRATION CHUNGANG UNIVERSITY MARKETING: Managing Profitable Customer RelationshipCOLLEGE OF BUSINESS ADMINISTRATION CHUNGANG UNIVERSITY

1 MARKETING: Managing Profitable Customer Relationship

process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others

COLLEGE OF BUSINESS ADMINISTRATION

CHUNG-ANG UNIVERSITY

PROF HYUNSUK SUH

The objectives of the current chapter are described.

Objectives

Be able to define marketing and discuss its core concepts

Understand the marketing process

Be able to understand five(5) marketing management orientations

Understand the strategies for building lasting customer relationships

What is your definition of “MARKETING”?

Is it for selling the product?

Are you talking

about advertising?

Commercial transactions?

Or customer

Example

To explain marketing, let’s take a look at the following example.

Marketing, What’s It All About?

All Those Bicycles!

Look at the Different Bicycles People Ride!

Things a Firm should do in Producing a Bike

Analyze Needs

Predict Wants Estimate How Many

Estimate Price Decide Promotion

Provide Service

Example

The definitions of the marketing are listed below.

What is Marketing?

Marketing is the process of planning and executing the conception, pricing,

promotion, and distribution of ideas, goods, and services to create exchanges

that satisfy individual and organizational goals.

American Marketing Association, 1986

마마마마마 마마마 마마마마마 ( 마마마마 ) 마마 마마마 마 마마마마 마마마 마마마마마 마마 마마마 마마마 마마 마마 마마마 마마마 (

마마마 ) 마 마마마 마마마 ( 마마마마 마 ) 마마 마마 마마 마마마마 마마마마마 마마마마 마마

Korean Scholars, 1993

The definitions of the marketing continues.

What is Marketing?

Managing markets to bring about exchanges and relationships for the

purpose of creating value and satisfying needs and wants

Social and managerial process by which individuals and groups obtain what

they need and want through creating and exchanging products and value

with others

Delivering customer satisfaction at a profit

The definitions of the marketing continues.

Kotler’s Social Definition of Marketing

Marketing is a social and managerial process by which individuals and groups

obtain what they need and want through creating and exchanging products and value with others

Marketing is managing profitable customer relationship

It is attracting new customers and retaining and growing current customers

Kotler & Armstrong, 2008, 2010

Marketing is a process by which companies create value for customers and

build strong customer relationships in order to capture value from customers

in return

Kotler & Armstrong, 2011

The unspecified one to one relationship of marketing in the prehistoric days, passed through series of evolutions, ending up showing the same fashion today.

마마마마 마마 마마마 마마마 ‘마마’

마마마 마마마마 마마마마 마마 마마 마마 마마마 마마마마 마마 마마

마마마 마마마마마 마마마 마마마 마마마마 마마 마마마마마 마마마마 마마마 마마마 마마마 마마

정정정정정 정정 Internet,

PC 정정 ,CATV 정

마마마마마

•Unspecified 1:1

•Word of mouth promotion

•Mass media

•To many and unspecified individuals

마마마마마

•Segment marketing

마마마마마

DB 마마마

•Individualized

•One to one

•Relationship

마마마마

마마마마

마마

마마

마마마 ,

마마마마마마

마마마마

마마

Evolution of Marketing

Needs Wants Demands

Products Services

Value Satisfaction Quality

Market

Exchange Relationship

The marketing process is illustrated in following diagram.

Marketing Process

Perceived Value

The customers’ evaluation of the difference between benefits and costs Customers often do not judge values and costs accurately or objectively Customer Satisfaction

Product’s perceived performance relative to customers’ expectations Value and Satisfaction

What does this ad trying

to do?

F

C

Product Concept

Selling Concept

Marketing Concept

Societal Marketing

Most in quality, performance, and innovative features

Sell what they make rather than make what the market wants

Creating long-term customer relationships based on the customer value and satisfaction

Deliver customer a superior value that improve customer’s and society’s well-being

The five(5) important marketing management concepts are described below.

The difference between the selling concept and the marketing concept is the process orientation: one is started from a ‘factory’ while the other started from the ‘customer’.

The Selling Concept vs Marketing Concept

Starting

Factory products Existing Selling and

promoting

Profits through sales volume THE SELLING CONCEPT

Market Customer needs Integrated marketing Profits through customer

satisfaction

THE MARKETING CONCEPT

How so?

Society (Human Welfare)

Consumers (want satisfaction) Company (Profits)

The more advanced form of societal marketing takes into consideration of all three(3) important factors together: The welfare, profits, and satisfaction.

The Societal Marketing Concept

1 정정정 정정정정 , 정정정정정정 ,

정정정정 , 정정정정 정정 정

정정정정정정

2 정정정 , 정정정정 , 정정정정정정

정정 정정정정 정정

정 ) 정정정정정 정정

Societal Marketing Concepts

Today, the standards of marketing practice have shifted from an emphasis on

producers’ interests to consumers’ interests and a consideration of the social and

environmental consequences of potential actions.

Ethics

Many marketing issues are not specifically addressed by existing laws and regulations

so many companies, industries, and professional associations have developed codes of ethics to assist managers.

You know that a considerable amount of food advertising is directed at children between the ages of

6 to 11 A recent findings report on the role of the media in influencing childhood obesity in the

United States The report concluded that the majority of research finds a direct link between the

amount of time children spend interacting with the media and their body weight “The report cites

studies showing that the typical American child sees about 40,000 ads a year on television, and that the majority of ads aimed at children are for sweets, cereal, soda, and fast food.”

QUESTIONS:

1 Do food ads children are exposed to on TV influence them to make unhealthy food choices?

2 Would you support government regulations directed at regulating food ads for children aged

6 to 11?

What is customer equity?

Customer Equity

The combined customer lifetime values of all current and potential customers

Measures a firm’s performance, but in a manner that looks to the future

Choosing the “best” customers is key

Example: Cadillac

In the 1970s and 1980s, Cadillac had some of the most loyal customers in the industry To

an entire generation of car buyers, the name “Cadillac” defined American luxury Cadillac’s

share of the luxury car market reached a whopping 51% in 1976 Based on market share and

sales, the brand’s future looked rosy However Cadillac customers were getting older

(average age 60) and average customer lifetime value was falling Many Cadillac buyers

were on their last car Thus, although Cadillac’s market share was good, its customer equity

was not Compare this with BMW Its more youthful and vigorous image didn’t win BMW the

Test yourself with the following concepts

Concept Check

1 The two very important marketing theme for today is to

_ and _

2 Based on _ concept, even if your customers had bad

experiences with your product, if you do well on your sales part, they will forget about the terrible memories and repurchase will occur.

3 Although the customers belong to the _ groups have long

term relationship with your company, they do not bring good profits.

4 An organization can’t satisfy the needs of all the customers, so it must focus on one or more of subgroups, which are its _

Consider the following issues.

DISCUSS THE FOLLOWING TOPICS

1 What consumer wants (or benefits) are met by the following products or services?

(a) Breakfast Cereal, (b) Adidas running shoes, (c) Hertz Rent-A-Car, and

(d) television home shopping programs.

2 Each of the four products, services, or programs in question 1 has substitutes

Respective examples are

(a) a ham and egg breakfast, (b) regular tennis shoes,

(c) taking a bus, and (d) a department store

What consumer benefits might these substitutes have in each case that some

consumers might value more highly than those products mentioned in question 1?

3 A college in a metropolitan area wishes to increase its evening-school offerings of

business-related courses such as marketing, accounting, finance, and management

In 1990, Allergan was just a small specialty pharmaceutical firm selling little-known eye and skin drugs and over-the-counter contact lens cleaners The introduction of Botox

wasn’t such a big deal initially After all, typical Allergan specialty products, it was just

another specialty drug aimed at a small market (treatment of cross-eye) That was before

doctor discovered that injecting Botox around eyes not only eliminated ocular problems, it erased frown lines as well Once that happened, the doctors in most major US cities were

giving patients off-label (not approved by the FDA for this use) Botox injections Even

though Allergan could not openly market the product for cosmetic purposes, by 2001 sales

of Botox was rocketed to $310 million and were growing between 25~35% per year FDA

approval granted in April 2002, only accelerated this sales bonanza With all those target

markets could become a blockbuster drug!

The side effects of Botox can be the loss of facial expressions (however this may be a

positive effect for some business people), drooping eyelids when injected on foreheads and around eyes (but this could also give you somewhat sexy looks) Botox can cause slurred speech, nausea, headaches, respiratory infections, and constant drooling However,

because Botox cosmetic lasts only 3~6 months all side effects are temporary.

Discuss the following problem.

Discuss the following problem.

Botox has become so lucrative and the demand so great that the treatments are

sometimes offered in a party atmosphere Doctors usually ask a current patient to invite

10~15 prospective clients to a party at his or her home After a brief social period, the

doctor gives a short lecture on Botox and invites the partygoers to sign up for treatment

Patients take turns leaving the room, and the doctor gives the injections in private Parties provide a non-clinical atmosphere more conductive to patient receptivity, and reduce time and cost The doctors can give patients a price break up to 25% of the original cost.

Q1 What are the needs, wants, and demands of consumers of Botox products in its

different treatment markets? What value does Botox deliver in each market?

Q2 When Allergan sold Botox as a specialty drug for ocular problems, what marketing

management orientation was it employing? When it sells Botox as a cosmetic treatment, is

it employing the same or different orientation?

Q3 When doctors treat patients with Botox in their office, is that an example of selling

concept or marketing concept? Which concept applies when they hold parties for patients