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Principles of Marketing

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Principles of Marketing ­ MGT301
VU
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
e
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
to
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
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Principles of Marketing ­ MGT301
VU
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
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Principles of Marketing ­ MGT301
VU
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
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Principles of Marketing ­ MGT301
VU
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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Table of Contents:
  1. PRINCIPLES OF MARKETING:Introduction of Marketing, How is Marketing Done?
  2. ROAD MAP:UNDERSTANDING MARKETING AND MARKETING PROCESS
  3. MARKETING FUNCTIONS:CUSTOMER RELATIONSHIP MANAGEMENT
  4. MARKETING IN HISTORICAL PERSPECTIVE AND EVOLUTION OF MARKETING:End of the Mass Market
  5. MARKETING CHALLENGES IN THE 21st CENTURY:Connections with Customers
  6. STRATEGIC PLANNING AND MARKETING PROCESS:Setting Company Objectives and Goals
  7. PORTFOLIO ANALYSIS:MARKETING PROCESS,Marketing Strategy Planning Process
  8. MARKETING PROCESS:Analyzing marketing opportunities, Contents of Marketing Plan
  9. MARKETING ENVIRONMENT:The Companyís Microenvironment, Customers
  10. MARKETING MACRO ENVIRONMENT:Demographic Environment, Cultural Environment
  11. ANALYZING MARKETING OPPORTUNITIES AND DEVELOPING STRATEGIES:MIS, Marketing Research
  12. THE MARKETING RESEARCH PROCESS:Developing the Research Plan, Research Approaches
  13. THE MARKETING RESEARCH PROCESS (Continued):CONSUMER MARKET
  14. CONSUMER BUYING BEHAVIOR:Model of consumer behavior, Cultural Factors
  15. CONSUMER BUYING BEHAVIOR (CONTINUED):Personal Factors, Psychological Factors
  16. BUSINESS MARKETS AND BUYING BEHAVIOR:Market structure and demand
  17. MARKET SEGMENTATION:Steps in Target Marketing, Mass Marketing
  18. MARKET SEGMENTATION (CONTINUED):Market Targeting, How Many Differences to Promote
  19. Product:Marketing Mix, Levels of Product and Services, Consumer Products
  20. PRODUCT:Individual product decisions, Product Attributes, Branding
  21. PRODUCT:NEW PRODUCT DEVELOPMENT PROCESS, Idea generation, Test Marketing
  22. NEW PRODUCT DEVELOPMENT:PRODUCT LIFE- CYCLE STAGES AND STRATEGIES
  23. KEY TERMS:New-product development, Idea generation, Product development
  24. Price the 2nd P of Marketing Mix:Marketing Objectives, Costs, The Market and Demand
  25. PRICE THE 2ND P OF MARKETING MIX:General Pricing Approaches, Fixed Cost
  26. PRICE THE 2ND P OF MARKETING MIX:Discount and Allowance Pricing, Segmented Pricing
  27. PRICE THE 2ND P OF MARKETING MIX:Price Changes, Initiating Price Increases
  28. PLACE- THE 3RD P OF MARKETING MIX:Marketing Channel, Channel Behavior
  29. LOGISTIC MANAGEMENT:Push Versus Pull Strategy, Goals of the Logistics System
  30. RETAILING AND WHOLESALING:Customer Service, Product Line, Discount Stores
  31. KEY TERMS:Distribution channel, Franchise organization, Distribution center
  32. PROMOTION THE 4TH P OF MARKETING MIX:Integrated Marketing Communications
  33. ADVERTISING:The Five Mís of Advertising, Advertising decisions
  34. ADVERTISING:SALES PROMOTION, Evaluating Advertising, Sales Promotion
  35. PERSONAL SELLING:The Role of the Sales Force, Builds Relationships
  36. SALES FORCE MANAGEMENT:Managing the Sales Force, Compensating Salespeople
  37. SALES FORCE MANAGEMENT:DIRECT MARKETING, Forms of Direct Marketing
  38. DIRECT MARKETING:PUBLIC RELATIONS, Major Public Relations Decisions
  39. KEY TERMS:Public relations, Advertising, Catalog Marketing
  40. CREATING COMPETITIVE ADVANTAGE:Competitor Analysis, Competitive Strategies
  41. GLOBAL MARKETING:International Trade System, Economic Environment
  42. E-MARKETING:Internet Marketing, Electronic Commerce, Basic-Forms
  43. MARKETING AND SOCIETY:Social Criticisms of Marketing, Marketing Ethics
  44. MARKETING:BCG MATRIX, CONSUMER BEHAVIOR, PRODUCT AND SERVICES
  45. A NEW PRODUCT DEVELOPMENT:PRICING STRATEGIES, GLOBAL MARKET PLACE