MARKETING FUNCTIONS:CUSTOMER RELATIONSHIP MANAGEMENT

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Principles of Marketing MGT301

Lesson 3

In last Lesson we had a detailed view of Marketing process and core marketing concepts. For

today the focus of discussion is on the increasingly powerful role of customers in the marketing

process and the need for marketers to provide value that exceeds customer expectations. Along

with the concept of relationship marketing major functions performed by the marketing are also

presented so today we will be discussing the following topics:

A. MARKETING FUNCTIONS

B. CUSTOMER RELATIONSHIP MANAGEMENT

Marketing Functions

There are eight Universal functions that are performed in marketing these are as shown in fig these

are Buying, selling, transporting, storing, standardizing and grading, financing and finally risk taking

now lets discuss these one by one:

Buying: (Raw material to

Information

Buying

produce goods and services and

to purchase finished goods or

services as retailer or whole seller Risk Taking

Selling

to sell them again for final

MMarkertnng

Univ sal

ar keti i g

customers and consumers). It is a

Fuunctiionns

F n ct o s

function that ensures that

product offerings are available in Financing

Transporting

sufficient quantities to meet

customer demands

Standardizing

Storing

Selling: The function to be

and Grading

performed

sell

the

products/services/idea to satisfy customer needs or wants. Using advertising, personal

selling, and sales promotion to match goods and services to customer needs

Transporting: Function related to create the availability of product or services. It is used

for moving products from their points of production to location convenient for purchases

Storing: Warehouses are used to store the products for further distribution.

Standardizing and grading: To provide more quality products and services without

variation in the quality. Ensuring that product offerings meet established and grading

quality and quantity control standards of size, weight, and other product variables

Financing: Providing the financial resources to carry out different function e.g. promotion

of product and providing credit for channel members (wholesalers retailers) or consumers

Risk taking: Marketer takes a risk specifically when any new product is introduced in a

market because there are equal chances of success and failure. Dealing with uncertainty

about consumer purchases

resulting from creation and marketing of goods and services

that consumers may purchase in the future

Securing Marketing Information: Collecting information about consumers, competitors,

information and channel members (wholesalers, and retailers) for use in making marketing

decisions Almost all marketing functions are based on information acquired from external

Principles of Marketing MGT301

environment and information distributed out of organization. Marketer seeks information

to find out customer needs and wants which are to be satisfied than after producing goods

and services awareness about the availability is required so that consumer can purchase the

available goods and services.

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.

Marketing management is the conscious effort to achieve desired exchange outcomes with target

markets. The marketer's basic skill lies in influencing the level, timing, and composition of demand

for a product, service, organization, place, person, idea, or some form of information.

Marketing Management is defined as the analysis, planning, implementation, and control of

programs designed to create, build, and maintain beneficial exchanges with target buyers for the

purpose of achieving organisational objectives. Which are:

Demand Management - marketing management is concerned with increasing demand, as well as

changing or even reducing demand. Marketing management is concerned not only with finding and

increasing demand, but also with changing or even reducing it.

1). Demarketing: Marketing to reduce demand temporarily or permanently; the aim is not to

destroy demand but only to reduce or shift it. Demarketing's aim is to reduce demand temporarily

or permanently (move traffic away from a popular tourist attraction during peak demand times).

2). In reality, marketing management is really demand management.

Building Profitable Customer Relationships - Beyond designing strategies to attract new

customers, marketing organizations also go all out to retain current customers and build lasting

customer relationships. (This is our second topic to be discussed today).

Customer Relationship Management

Before going in the detail of customer relationship marketing first we should know that what is

relationship marketing? It is basically Establishing a long-term continuous relationship with the

customer, initiated and managed by the firm. This relationship must provide value to both parties.

If a customer is lost, not only is that particular transaction lost, but perhaps all future transactions

throughout the life of that customer.

As discussed earlier that marketing is the

organizational function charged with defining

Customer Relationship

customer targets and the best way to satisfy needs

and wants competitively and profitably. Since

Management

consumers and business buyers face an abundance

of suppliers seeking to satisfy their every need,

companies and nonprofit organizations cannot

survive today by simply doing a good job. They

must do an excellent job if they are to remain in

the increasingly competitive global marketplace.

Many studies have demonstrated that the key to

profitable performance is to know and satisfy

target customers with competitively superior

offers. This process takes place today in an

increasingly global, technical, and competitive

environment. When marketing helps everyone in a

Principles of Marketing MGT301

firm really meet the needs of a customer both before and after a purchase, the firm doesn't just get

a single sale. Rather, it has a sale and an ongoing relationship with the customer. That's why we

emphasize that marketing concerns a flow of need-satisfying goods and services to the customer.

Often, that flow is not just for a single transaction but rather is part of building a long-lasting

relationship that is beneficial to both the firm and the customer.

1. CRM Customer relationship management

"CRM is the overall process of building and maintaining profitable customer relationships by

delivering superior customer value and satisfaction." CRM Customer relationship management can

be defined: as 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.

2. The basic goals of the CRM are:

Customer relationship marketing provides the key to retaining customers and involves providing

financial and social benefits as well as structural ties to the customers. Companies must decide how

much relationship marketing to invest in different market segments and individual customers, from

such levels as basic, reactive, accountable, proactive, and full partnership. Much depends on

estimating customer lifetime value against the cost stream required to attract and retain these

customers.

Total quality marketing is seen today as a major approach to providing customer satisfaction and

company profitability. Companies must understand how their customers perceive quality and how

much quality they expect. Companies must then strive to offer relatively higher quality than their

competitors. This involves total management and employee commitment as well as measurement

and reward systems. Marketers play an especially critical role in their company's drive toward

higher quality. The basic goals of CRM are:

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 Enable companies to provide excellent real-time customer service

by developing a relationship with each valued customer through the effective use of

individual account information

Based on customer attributes, companies can customize market offerings, services,

programs, messages, and media

Reduces the rate of customer defection

Increases the longevity of the customer relationship

Enhances the growth potential of each customer through "share of wallet," cross-selling,

and up-selling

Makes low-profit customers more profitable or terminates them

Focuses disproportionate effort on high value customers

CRM is mainly based upon the customer loyalty that is of great importance for the marketer

because firms have realized the value of customer retention. 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. The value of loyalty goes beyond single customer for the reason that loyal

Principles of Marketing MGT301

customers provide more and more credible referrals but the angry gossip of disloyal customers can

devastate a firm.

3. Building Profitable Customer Relationships

Managing demand means managing customers because:

1. A demand comes from new customers and repeat customers.

2. Today, besides making efforts to attract new customers, marketers are going all out to

retain and build relationships with existing customers. It costs five times as much to attract

a new customer as it does to keep a current customer satisfied.

3. Because of changing demographics, a slow-growth economy, more sophisticated

competitors, and overcapacity in many industries, many markets and market shares are

shrinking. The key to successful customer retention is superior customer value and

satisfaction.

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