Marketing: Managing Profitable Customer Relationships

Marketing: Managing Profitable Customer Relationships

中国经济管理大学/中國經濟管理大學

Marketing: Managing Profitable Customer Relationships

Previewing the Concepts—Chapter Objectives

1. Define marketing and outline the steps in the marketing process.

2. Explain the importance of understanding customers and the marketplace, and identify the five core marketplace concepts.

3. Identify the key elements of a customer-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

4. Discuss customer relationship management and strategies for building lasting customer relationships.

5. Describe the major trends and forces that are changing the marketing landscape in this new age of relationships.

JUST THE BASICS

Chapter Overview

Marketing is all about customer relationships—profitable customer relationships. Whether your company sells expensive systems to a few key customers or toothpaste to millions, understanding the customer is the heart of a successful business. Although everyone within a company must be obsessed with making sure the customer is happy, one of the many roles of marketing is growing current customers and acquiring new ones.

Marketing is defined as a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging value with others. Figure 1-1 of the text shows a model of the marketing process that includes understanding the marketplace and customer needs and wants; designing a customer-driven marketing strategy; constructing a marketing program that delivers superior value; building profitable relationships and creating customer delight; and capturing value from customers to create profits and customer equity. The chapter reviews these five steps, focusing on the relationship aspect of marketing.

Chapter Outline

1. Introduction 

a. Amazon.com has come to define Internet shopping.

b. It is a company that is completely customer-driven. Even with millions of customers, they are able to develop a relationship with each and every one.

c. Amazon wants to make each customer feel that their experience is unique and personal.

d. Successful companies of all types share Amazon’s passion for marketing and understanding and satisfying customers needs.

2. What Is Marketing?

a. A simple definition of marketing is managing profitable customer relationships.

b. Marketing must both attract new customers and grow the current customers.

c. Every organization must perform marketing functions, not just for-profit companies. Non-profits also must also perform marketing.

Marketing Defined

d. Most people think of marketing as selling and/or advertising, “telling and selling.”

e. Marketing must focus on satisfying customer needs.

f. The formal definition of marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging value with others.

Use Key Term Marketing here.

Use Chapter Objective 1 here.

The Marketing Process

g. Figure 1-1 shows the five-step marketing process.

• Understand the marketplace and customer needs and wants.

• Design a customer-driven marketing strategy.

• Construct a marketing program that delivers superior value.

• Build profitable relationships and create customer delight.

• Capture value from customers to create profits and customer equity.

h. The first four steps create value for customers and build relationships with them.

i. The last step captures value from the customer in return for the value delivered.

Use Figure 1-1 here.

Let’s Discuss This

At this point, stop and ask students if the marketing process just described was what they had in mind when they signed up for this class. Did they understand the full extent of marketing? What was their conception of marketing when they first walked through the door?

3. Understanding the Marketplace and Consumer Needs

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

b. Five core marketplace concepts are reviewed in this section:

• Needs, wants, and demands;

• Marketing offers (products, services, and experiences);

• Value and satisfaction;

• Exchanges, transactions, and relationships; and

• Markets.

Needs, Wants, and Demands

c. Human needs are felt deprivation.

d. They include physical needs (food, clothing, safety); social needs (belonging, affection); and individual needs (knowledge, self-expression).

e. These needs are not created by marketing; they are intrinsic to humans.

f. Human needs take the form of wants when culture and personality are applied. They are shaped by society.

g. Wants become demands when they are backed by buying power.

h. Value and satisfaction are the motives for people to demand products.

i. Marketing research helps companies understand customers’ needs, wants, and demands.

Use Key Terms Needs, Wants, and Demands here.

Use Discussing the Issues 1 here.

Use Application Questions 1 here.

Applying the Concept

If time permits, have the students break into groups to discuss the concepts of needs, wants and demands as they were applied to their decision-making process for applying to college, and accepting the offer from the University they are attending. Have them discuss their groups’ responses in terms of the needs, wants, and demands, rather than how they might describe it to their friends or family.

Marketing Offers—Products, Services, and Experiences

j. A marketing offer is a combination of products, services, information or experiences offered to satisfy a need or want.

k. Marketing offers can also include such things as persons, places, organizations, information, and ideas.

l. Marketing myopia is paying more attention to the individual products offered, rather than the need satisfied, or benefits produced.

m. Companies should focus on brand meaning and brand experience, rather than just the product attributes.

n. Experiences have emerged as differentiating factors for many companies, including Disney, Harley Davidson, and Barnes & Noble

Use Key Term Marketing Offer here.

Use Marketing at Work 1-1 here.

Value and Satisfaction

o. Consumers make their choices based on their perception of the value offered by each company.

p. Companies have to be able to set the right level of expectations—set them too low, and they may succeed in satisfying them, but they won’t be able to attract many customers. If they set expectations too high, they could risk disappointing customers.

Exchange, Transactions, and Relationships

q. A core concept in marketing is exchange, which is the act of obtaining a desired object from someone by offering them something in return.

r. A transaction consists of a trade of values between two parties, and is the unit of measurement in marketing.

s. Marketing consists of actions taken to build and maintain desirable exchange relationships with target audiences.

Use Key Terms Exchange and Transaction here.

Use Chapter Objectives 2 here.

Markets

t. A market is defined as the set of actual and potential buyers of a product.

u. Marketers must manage markets to create the desired exchange relationships.

v. Sellers search for buyers, identify their needs, design good marketing offers, set prices for them, promote them, and store and deliver them.

w. Marketing generally involves serving a market of final buyers in the face of competitors.

x. A company’s success depends on how well their entire system meets the needs of the consumer; the system includes their suppliers, their products and services, and any marketing intermediaries they use.

Use Figure 1-2 here.

4. Designing a Customer-Driven Marketing Strategy

a. Marketing management is defined as the art and science of choosing target markets and building profitable relationships with them.

Use Key Term Marketing Management here.

Selecting Customers to Serve

b. The company must decide whom it will serve by dividing the market into segments of customers (market segmentation) and selecting which segments to serve (target marketing).

c. Some marketers need to reduce demand for their product; this is defined as demarketing.

Use Key Term Demarketing here.

Use Discussing the Issues 2 here.

Deciding on a Value Proposition

d. A company must decide how it will differentiate and position itself.

e. A company’s value proposition is the set of benefits or values it promises to deliver; these value propositions differentiate one brand from another.

f. Companies must define value propositions that give them advantage in the marketplace.

Marketing Management Orientations

g. Companies must decide on their philosophy to guide their marketing strategy.

h. There are five alternative philosophies.

i. The production concept says that consumers will favor products that are available and affordable.

j. In the product concept, consumers favor products that are highest in quality, performance, and innovative features.

k. Companies that utilize the selling concept undertake large-scale selling and promotional effort to get consumers to buy.

l. The marketing concept says that the company needs to understand the needs and wants of the target markets and deliver satisfaction better than their competitors do.

m. The societal marketing concept is a relatively new concept that asks companies to not overlook consumer long-run welfare while meeting their short-run wants.

n. Figure 1-3 illustrates the differences between the selling concept and the market concept.

Use Key Terms Production Concept, Product Concept, Selling Concept, Marketing Concept, and Societal Marketing Concept here.

Use Figures 1-3 and 1-4 here.

Use Chapter Objectives 3 here.

Use Discussing the Issues 3 here.

5. Preparing a Marketing Plan and Program

a. The marketing strategy outlines which customers the company will serve.

b. Guided by that strategy, marketing programs are developed to deliver value to the target customers.

c. The marketing mix is the set of tools the company uses to implement the strategy.

d. The marketing tools are classified into four categories, called the four Ps of marketing: product, price, place, and promotion.

Use Speed Bump here.

6. Building Customer Relationships

a. The previous discussion covered the first three steps in the marketing process—understanding the marketplace and customer needs; designing a customer-driven marketing strategy; and constructing marketing programs.

b. The fourth and most important step is building profitable customer relationships.

Customer Relationship Management

c. Customer Relationship Management (CRM) is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.

d. A customer evaluates the difference between all the benefits and all the costs of a marketing offer; this is the customer perceived value.

e. The perceived values and costs may not be accurate or objective.

f. Customer satisfaction depends on the products’ perceived performance versus the customers’ expectations.

g. The key is to match customer expectations with company performance.

h. The marketer must balance customer satisfaction level with profitability.

i. There are levels of customer relationships.

j. The basic relationship level is at one extreme and is exhibited in markets with many low-margin customers.

k. Full partnerships are developed in markets that have few customers and high margins

l. Many companies today develop customer loyalty and retention programs.

m. One way of doing that is by offering financial benefits, such as frequency marketing programs.

n. Companies can also add social benefits, such as club marketing programs.

o. Yet another approach is structural ties such as FedEx’s Web links to its customers.

Use Key Terms Customer Relationship Management, Customer Satisfaction, and Customer Perceived Value here.

Use Discussing the Issues 4 here.

Use Marketing at Work 1-2 here.

Use Application Questions 2 here.

The Changing Nature of Customer Relationships

p. Today’s companies are building lasting relationships that are direct. They are targeting fewer, but more profitable customers.

q. In addition to delivering value to customers, companies are assessing the value they get from customers.

r. Companies are also trying to use CRM to build profitable, long-term relationships with customers that will enable them to retain the customers they wish to serve.

s. Direct marketing is growing; some companies sell only through direct channels, such as Dell and Expedia.

Partner Relationship Marketing

t. Companies work with many partners and engage in partner relationship management.

u. Inside the company, every functional area could interact with customers; no longer is the marketing department solely responsible for understanding customers. Many companies are forming cross-functional selling teams, which can consist of sales and marketing people, operations specialists, financial analysts, and more.

v. Outside the firm, the company may deal with distributors, retailers, and others. The supply chain stretches from raw materials to components to final products that are carried to final buyers.

w. Connections must also be made with the members of the supply chain.

Use Key Term Partnership Relationship Management here.

Use Discussing the Issues 5 here.

7. Capturing Value from Customers

a. In the last step in the marketing process, the company captures value from the customer.

b. Satisfied customers stay loyal and buy more, which means greater long-run returns for the company.

Creating Customer Loyalty and Retention

c. Completely satisfied customers are the most loyal, and even a slight drop in satisfaction can make a big difference in loyalty.

d. Customer lifetime value is an important concept that says that if you lose a customer, you don’t just lose one sale. You potentially lose thousands or even hundreds of thousands that a customer could spend over their lifetime.

e. As a marketer, you need to help customers form an emotional bond with your brand, rather than just making a rational choice.

Use Key Term Customer Lifetime Value here.

Use Chapter Objectives 4 here.

Use Discussing the Issues 6 here.

Use Application Questions 3 here.

Let’s Discuss This

Have the students discuss brands with which they have an emotional bond. For some students, this could be Abercrombie & Fitch. For others it could be a brand of beer. At a major University, it could be the University itself. Then ask them to discuss how they would react if another brand made them an interesting offer: would they be willing to switch brands under that circumstance? Why or why not?

Growing Share of Customer

f. Customer Relationship Management helps grow share of customer—the share the company gets of that customer’s total spending on the product or service type.

g. Companies can grow share of customer by offering greater variety to their current customers.

h. Cross-selling and up-selling are two other ways of increasing customer expenditures with the company.

Use Key Term Share of Customer here.

Building Customer Equity

i. Customer equity is the total combined lifetime values of all the company’s customers.

j. Customer equity forecasts the future, whereas sales and market share tell what happened in the past.

k. Companies can classify their customers as to whether they are profitable or not, and then manage the relationships accordingly.

l. Figure 1-5 shows one model of customer classification by profitability and projected loyalty.

m. A key learning is that different types of customers require different management strategies to maintain and increase profitability.

Use Key Term Customer Equity here.

Use Figure 1-5 here.

Use Speed Bump here.

8. The New Marketing Landscape

a. In this section, five trends are identified and discussed that show how rapidly the business world is changing.

The New Digital Age

b. Combined technology and information explosions have changed the way we relate to one another across the globe.

c. Technology has enabled companies to learn more about customers, to get their products out to a much larger, global audience, and to tailor their products to individual customer needs.

d. There are also many new ways to reach customers, including CD-ROMs, interactive TV, and other new technologies that let companies focus in on individual customer needs.

e. The Internet currently reaches 67% of the United States’ population, and globally it reaches 655 million people.

f. Business-to-business e-commerce was $3.9 trillion last year and is expected to continue to grow rapidly.

Use Key Term Internet here.

Use Under the Hood/Focus on Technology here.

Rapid Globalization

g. Companies large and small are globalizing, if only because they are facing global competition themselves.

h. This has resulted in a much more complex marketing environment for all companies.

i. Companies are also buying more of their supplies outside their home country

j. Many companies form strategic alliances and joint ventures with foreign companies to build global networks.

Use Marketing at Work 1-3 here.

The Call for More Ethics and Social Responsibility

k. Companies are being asked today to look at what their impact is on their environment.

l. Those companies that look to the future are accepting their responsibilities in the areas of social and environmental impact.

m. Many companies, such as Ben & Jerry’s and others, practice “caring capitalism” by being civic-minded.

Use Focus on Ethics here.

The Growth of Not-for-Profit Marketing

n. Colleges, hospitals, museums, and other not-for-profit companies and associations are using the same marketing strategies as for-profit companies.

o. Government agencies are also utilizing marketing for both recruitment and social marketing campaigns.

The New World of Marketing Relationships

p. Old marketing saw the function as just selling and advertising, but new marketing sees it as building relationships.

q. Companies are forming direct relationships with customers and improving their customer knowledge.

9. So, What Is Marketing? Pull It All Together

a. Marketing is the process of building profitable customer relationships by creating value for customers and capturing value in return.

b. The first four steps are focused on creating value for the customer, while the last step returns value from the customer to the company.

c. After the marketing strategy is defined, the marketing program is developed, which consists of the four Ps.

d. When building value for customers, companies must utilize marketing technology, go global in both selling and sourcing, and act in an ethical and socially responsible way.

e. Figure 1.6 shows a model of the marketing process, and the remainder of the text goes into detail on all of the concepts covered in this first chapter.

Use Chapter Objectives 5 here.

Use Table 1-1 here.

Use Figure 1-6 here.

Travel Log

Discussing the Issues

1. Why is understanding customer wants so critical for marketers? How are the concepts of value and satisfaction related to each other? Explain the difference between transactions and relationships.

Wants (i.e., hamburger) are the form needs (i.e., food) take when shaped by culture and personality. They are important because marketers sell to wants not to needs. Perceived value drives satisfaction. If the value is not up to the consumer’s expectations they will be dissatisfied. Transactions are one time, discrete exchanges, while relationships imply a series of relationships.

2. Why is target market selection important for a customer-driven marketing strategy? Discuss some of the negative consequences a company might incur from not paying enough attention to selecting its target market.

The company must first decide on the target market because different market segments may have different wants which would require different offerings. The biggest negative consequence is that a company will offer a product that does not fit the target market’s needs. Other issues students might discuss are that the market selected is small, inaccessible, or already served by many other companies. 

3. Discuss the differences between the production, product, selling, marketing, and societal marketing concepts. Identify circumstances where each one may be appropriate.

The production concept holds that consumers will favor products that are available and highly affordable. Therefore, management should focus on improving production and distribution efficiency. The production concept is useful when demand for a product exceeds the supply. The selling concept holds that consumers will not buy enough of the firm’s products unless it undertakes a large-scale selling and promotion effort. Firms often practice the selling concept when they face overcapacity. The marketing concept holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do. This works best in competitive markets where companies are in tune with customer’s product requirements. The societal marketing concept holds that marketing strategy should deliver value to customers in a way that maintains or improves both the consumer’s and the society’s well being. This concept is used by firm’s wishing to take a long-term view of their operations.

4. What are the advantages for a company in building relationships with its customers? What are some ways in which a company can build customer relationships?

Customers who perceive a relationship exists with the firm are likely to be more loyal, spend more, and offer advice to the firm for improving its operations. An instructor could use the second part of this question to illustrate concepts such as database management, lifetime value of a customer, and one-to-one marketing.

5. Discuss the potential for technological advances and globalization to change the manner in which companies interact with their customers and business partners.

Students will come up with a variety of responses based on their reading of the chapter and their own experiences. The instructor could use this question to emphasize how markets, and the way they can be approached, are always changing. Also use this question to broaden the student’s thinking about the world market—both suppliers and customers.

6. Think of a company in your town with which you have a relationship. What value do you get from that relationship and how does that company capture value from you in return?

Student responses will vary because the question is based on their own experiences. Instructors can use this question to emphasize the concept of customer perceived value—the customer’s evaluation of the difference between all the benefits and all the costs of a marketing offer relative to those of competing offers. This question will also bring out how the company benefits from creating customer value: customer loyalty and retention, share of market and share of customer, and customer equity.

Application Questions

1. Human needs are a basic desire for things one does not have (e.g., clothing). These needs are transformed into specific wants by one’s individual personality and the culture in which one lives. Consider the basic need of self-expression. This need can be transformed into a variety of “wants.” For example, clothing, hairstyles, tattoos, and body piercing could satisfy this need. Discuss the degree to which a company offering clothing should consider other companies offering hairstyles, tattoos, and body piercing as competitors for consumers motivated by self-expression. 

Although not “direct” competitors, clothing, hairstyles, tattoos, and body-piercing all represent a way for an individual to express themselves. As such, they can be considered competitors on a “needs-based” level rather than competitors within a product category. Use this question to illustrate the value of looking at competitive forces outside of one’s product category.

2. Specific marketing tools to develop stronger bonds with consumers include financial benefits, social benefits, and structural ties. Identify three different companies you feel exemplify each of these tools. Explain how each company uses the tool to build customer relationships. Among the three companies you identified, consider if it would be advisable for those using the financial or social benefits approach to also include structural ties.

Student responses will vary to this question. It is may be useful to use this question to illustrate the importance of considering the cost of developing relationships (e.g., adding the infrastructure associated with structural bonds) relative to the potential revenue increase resulting from this deeper relational bond.

3. Companies using the concept of customer lifetime value consider the potential profit from customers over their entire life with the company, not just their potential profit from a single transaction. When banks began tracking the profitability of individual customers, some found that a large percentage of their customers actually cost them more to do business with than the revenue they produced. Considering the lifetime value of a customer concept, should companies “fire” their unprofitable customers? What are the consequences of such an action? What factors should a company consider before taking steps to eliminate their unprofitable customers?

Students may be unwilling to consider firing customers, however profitability concerns may force the company to be more selective in whom it serves. An interesting side discussion to this question is how one would actually go about asking customers to not come back. Additionally, the instructor can use this question to get students to think about the long-run view of the customer. That is, an unprofitable customer today may become profitable later in their life as a customer (many of the students are probably not profitable to their banks now, but will be when they start taking out loans, buying securities, etc.). As such, it is important to look long term when assessing customer profitability. 

Under the Hood/Focus on Technology

Although the Internet has provided a medium for companies to develop relationships with customers, it has also created a means by which customers can share consumption experiences with other customers. Some companies, such as Amazon.com, allow customers to post product reviews directly on the company’s website. In addition, dedicated consumer opinion websites (e.g., www.epinions.com, www .consumerreview.com, and www.rateitall.com) provide consumers with the opportunity to read other consumers’ consumption opinions and experiences, as well as to write their own on just about any product or service sold.

Visit the rating websites listed above and read some of the reviews for a product in one of the following categories: digital cameras, video game systems, or athletic shoes. Next respond to the following questions with this product in mind.

1. How much influence do you think consumer-to-consumer ratings have on the purchase decision for this product? What factors may make this influence stronger or weaker?

Student responses will vary. Factors impacting the influence might include the amount and quality of other sources of information, how much information the consumer already has, and their own level of experience with the product category.

2. Discuss whether the ability of a consumer to receive product performance information directly from other consumers helps or harms this company’s promotional efforts?

Instructors can use this question to discuss both positive and negative electronic word-of-mouth. One could also have students consider consumer “hate” sites on the Internet (e.g., www.untied.com—a site criticizing United Airlines). 

3. What might this company do to use consumer-rating websites to its advantage?

A variety of responses exist for this question. For example, the company could respond directly to those consumers dissatisfied with their products. Also the company could monitor the review websites to assess customer satisfaction for its products and develop new ideas for product improvement. 

Focus on Ethics

The marketing concept focuses on satisfying customer’s needs, but what if doing so places the consumer at risk? A variety of legal products are sold that may have harmful effects on consumers. The health impact of tobacco and alcohol are well known. More recently, many individuals and the Food and Drug Administration have become concerned about the level of trans-fatty acids present in some food products. Companies such as McDonalds, Kraft Foods, and Frito-Lay have recently been re-evaluating their offerings and have begun to initiate changes to make their food healthier. For example, McDonalds will soon test a Happy Meal that will allow the option of replacing french fries with a bag of sliced fruit.

1. What ethical responsibility do companies producing products that have potentially adverse health effects have to consumers?

Given the nature of the question, there will be many valid opinions on this question. One way to approach this is to have students think about the question from different points of view (e.g., consumers, government, shareholders, company management, etc.).

2. Are the goals of increasing profits and of the societal marketing concept at odds with one another?

The instructor can point out that taking a long-term view leads to short-run profit declines in some cases, but that profitability and social responsibility are not mutually exclusive goals.

3. Break into groups of four to six students. Within each group half of the students should consider reasons for why marketing potentially unhealthy products, like McDonalds french fries, is ethical. The other half of the group should consider reasons for why such actions are unethical. Debate the issue.

After the debate in small groups, the debate could be continued using the entire class. Have the students switch sides of the issue for the large class debate. Also have students debate as different stakeholders (e.g., consumers, government, shareholders, company management, etc.).

4. What ethical concerns exist behind a McDonald’s order taker asking all customers if they want to supersize their meal? Is this giving consumers what they want, or is this inducing many overweight people to eat more than necessary? Debate the issue.

This question is likely to raise some heated debate regarding the purpose of the organization. At its core, the question gets at the idea of doing what the customer wants versus doing what is best for the customer. This question highlights that sometimes these may be different things.

GREAT IDEAS

Barriers to Effective Learning

1. For most students, this will be their first introduction to marketing and all its ramifications. To most of them, marketing is nothing more than selling and/or advertising, and this gets reinforced daily when they see “marketing” job ads that are really sales positions. It helps to get students talking about what marketing is, and to give examples of what they think is really good marketing. Try to bring in contemporary examples that the students can relate to.

2. Building relationships can sometimes be easy to understand in a business-to-business transaction, but it can be much more difficult to comprehend in consumer businesses. Use examples such as Amazon.com that do a wonderful job of developing one-on-one relationships with millions of customers through their tracking of customer purchases and analysis of that to recommend additional items. Ask students to discuss how they feel about the companies they buy from. Have any developed relationships with them that have made them loyal to the brand or store?

3. Demarketing is always a problem for students. Most of them have not yet encountered anything like it. The light bulb seems to go on, though, when you talk about National Parks and how crowded they get, and efforts to get people to go see them in off-peak travel times. Again, having students come up with their own examples will increase the level of understanding.

4. Societal marketing is also something that can be a little unclear to students. Why should fast food chains, for instance, be responsible for the nation’s obesity (just one very topical discussion point)? Understanding how one should balance the need for profits with what some might consider to be “soft” issues can be difficult at times. And that can be made even more difficult among the politically-astute students, as they can easily lead the class into a left versus right discussion on individual versus corporate versus governmental responsibility. Try to not let that happen, instead focusing on how companies can actually increase their revenue and profits by showing that they care about their customers and their communities. Newman’s Own is a brand that could be discussed, as most profits are donated to charities, and they have moved strongly into ensuring a sustainable environment.

5. Traditional-age undergraduates have spent their entire lives with technology, and so some of them can actually snicker when the discussion turns to how technology has changed business in general and marketing more specifically. A discussion of the difficulties of connecting to consumers without the Internet is warranted. How would the students approach a one-on-one relationship with millions of customers if they didn’t have email or the Internet or blast faxes?

6. At this stage, students are very apprehensive about the course. When they walked into class, they thought they might learn about selling and advertising, and now they’ve discovered that there is much more to marketing than just those two subjects. Talking about how much fun it is to be the center of the company, knowing more about customers than any other functional area in the company, can sometimes ease their minds and make them look forward to learning more. And emphasizing that marketing combines both the analytical and the creative can also ease some tension—the accounting and finance majors will find that there is something in it to suit their more analytical frame of reference, and the artists and designers who hope to become fashion mavens can also rest assured that although they will need to understand the more logical areas of the subject, their intuition can still reign supreme.

Student Projects

1. Clip or photocopy three current print advertisements and identify the marketing orientation that, in your opinion, the companies appear to be following.

2. Develop a list—try for 10 each—of your needs and wants. How are they different? What appeals on the part of companies seem to get your interest and attention? What do you think would be the most successful way for a company to appeal to you if you were considering the purchase of (a) a computer; (b) a car; (c) a college education, and (d) a soft drink?

3. Find an article from a contemporary business publication that describes a company’s commitment to relationship marketing or connecting with consumers. Abstract the article and share your findings with the class.

4. Many years ago, American Airlines created a new business “must have” by offering frequent flier miles. All the airlines followed, and hotels weren’t far behind. Most of these programs only offer a tracking system and upgrades to their best customers, but Wyndham hotels are different. Go to the Wyndham website (www.wyndham.com) and find the Wyndham ByRequest™ tab. Fill out the form for membership, and then discuss how Wyndham is creating a relationship with customers far and above what the typical hotel does in their frequency marketing program. Discuss how this could create increased customer equity.

5. Identify the major variables of the marketing mix. Discuss how they might differ between a for-profit business and a non-profit organization.

Classroom Exercise/Homework Assignment

If the classroom has Internet access, this is a good classroom exercise. Otherwise, it can be assigned as homework.

Sean “P. Diddy” Combs knows how to tap into a cultural phenomenon. Already a star in the world of Hip Hop, in 1998 he launched a line of sports clothing for men, women and children. He sells his clothes in virtually all markets—from stores located in inner cities to Bloomingdale’s. The website for Sean John clothing combines fashion with Hip Hop music, and appeals to those who enjoy urban culture with his tag line, “It’s not just a label, it’s a lifestyle.” Visit the website at www.seanjohn.com for more information.

1. What is Sean John’s marketing offer, as exhibited on the website?

Sean John offers a bit of urban culture on the Internet. Featuring music from P. Diddy himself, as well as the stars of his BadBoy Entertainment label, the website evokes the inner city culture the clothing line represents. Thus, Sean John’s marketing offer contains both the product itself as well as the experience of being a “bad boy.”

There is also information about the company on the website, including a discussion of how vendors are selected and the company’s infrastructure. Finally, there is a store locator link, and if you can’t find anything close by, Sean John very helpfully sends you to the www.macys.com site where you can buy online.

So, the marketing offer includes the clothes themselves, popular music, and information about the company as well as stars of the music world.

2. What marketing management orientation does Sean John seem to be following?

Sean John appears to be utilizing the marketing concept. They have clearly tapped into a generational philosophy that wanted recognition in the broader culture.

There is one brief area where the societal marketing concept might come in to play, and this should not be ignored. On the website the company notes that their vendors are audited for health and safety standards as well as the quality of their work. The company says that it will not work with vendors that exploit their employees. Although the language of the hip hop music may argue against the societal marketing concept, some students may claim that the unwillingness to deal with vendors who abuse employees in any way shows that the company cares about society as a whole.

3. Suggest ways that Sean John might be able to build relationships with their final customers, because retail outlets are responsible for actually selling the clothes to those who will wear them.

Sean John easily relates to their final customers through the design of the website and the music that plays on it. But it doesn’t appear that they currently try to build relationships with their customers. There is virtually no information on how to contact the company, although there is a way to send in comments, and it requests the commenter’s email ID for response.

Sean John does have the opportunity to develop relationships with their customers, however. Suggestions from students could include allowing a greater level of contact with those who visit the website, allowing them, for instance, to record their likes and dislikes as they are viewing the clothing line. Information could also be collected regarding those who use the store locator link, and direct links could be made to address and phone number information of the stores, or to their websites. There could be a guest book for visitors to sign, and those who do sign in could be given the option of receiving emails when new collections are being launched. Suggestions also could include giving special discounts to those who visit the website, to see how many visitors are actually converted into buyers.

Classroom Management Strategies

The first chapter of this textbook sets the stage for the rest of the content. It outlines the major topics and principles that will be discussed in each of the following chapters, and gives the student a good grounding in what to expect in their journey into the world of marketing.

First classes are always difficult, both for the instructor and for the student. Therefore, using examples that students can relate to easily is always a good idea when starting out. The marketing application, Sean John clothing, attempts to do that, and can be scheduled for the end of the class, or given as an assignment for the next scheduled meeting.

In reviewing the material in class, a good way to break it down follows. This assumes a typical one-hour structure; if the class is longer, you can work through the Marketing Application in class. If shorter, you can either break the chapter over two sessions, or shorten each topic’s allotted discussion time.

1. Ten minutes should be spent on discussing what marketing really is. Many students will come into class thinking they are going to be learning all about advertising, or all about selling. Ask students to talk about what they think marketing is, and to use examples of what they’ve encountered in their own lives.

2. Ten minutes can also be spent on the second major topic of the chapter, understanding the marketplace and consumer needs. Discussing the differences of needs, wants, and demands, and how they relate to marketing, can greatly enhance the students’ understanding of the basis of marketing. Also included in this section are the notions of marketing offers, satisfaction, and relationships. You can discuss the various ways companies develop relationships with their customers. Using Amazon.com, the company discussed in the opening pages of the chapter, can really help the students understand that a company with millions of customers can still easily develop relationships with each and every one of them.

3. Another 10 minutes can be spent on designing customer-driven marketing strategies. Many students will still not understand how needs, wants, and demands can drive companies’ product development, but this section of the chapter will help them see it a little more clearly.

4. Preparing a marketing plan and program can be covered in 5 minutes. This section shows how everything they learn in marketing will be pulled together, but it is too soon in the semester to be spending a lot of time on the topic.

5. Customer relationships are the heart of the chapter and the entire text. Spend 15 minutes discussing this topic, and use examples that the students will appreciate. Discussing the difference in the relationships they have with their hairdresser or barber and that of bn.com or another one of the Internet merchants can drive home the importance of holding on to good customers. Students will also be well aware of frequency marketing programs, and examples of those will also be beneficial.

6. The final 10 minutes can be spent discussing the future of marketing and the development of customer relationships. The students will never have known an era without the Internet. Asking them how they would have developed relationships with their customers without the assistance of technology is a good way to get a discussion started on how marketing programs are developed. Then you can talk about how the advent of email and the Internet has opened the entire world for even a small retailer, as well as raised some ethical issues, such as the marketing of the American culture to the entire world, regardless of their societies’ mores and culture.

If time permits, revisit the question of “what is marketing?” The students should now have a greater appreciation of the science behind marketing, as well as the creativity necessary to develop successful marketing programs.

中国经济管理大学

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