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Chapter1Marketing

CreatingandCapturingCustomerValueCopyright2011,PearsonEducationInc.PublishingasPrentice-Hall

1-2Definemarketingandthemarketingprocess.Explaintheimportanceofunderstandingcustomersandidentifythefivecoremarketplaceconcepts.Identifytheelementsofacustomer-drivenmarketingstrategyanddiscussthemarketingmanagementorientationsthatguidestrategy.Discusscustomerrelationshipmanagementandidentifystrategiesforcreatingvalueforandcapturingvaluefromcustomers.Describethemajortrendsandforcesthatarechangingthemarketinglandscape.RestStop:

PreviewingtheConceptsCopyright2011,PearsonEducationInc.PublishingasPrentice-Hall

1-3CreatingCustomerValueGoal:Providetheverybestcustomerservice&customerexperience.Customer-centricapproach:Freedelivery,freereturns,365dayreturnpolicy&serviceupgrades.Results:75%ofsalescomefromcurrentcustomers,tremendoussalesgrowthdespitepooreconomy,10millioncustomersservedannually.ZapposCreatesCustomerValue&RelationshipsFirstStopBuildingRelationshipsServiceCulture:Builtaround10coreprinciples;everynewhiretakes4weeksofcustomerloyaltytraining.Commitment:Duringtraining,employeesareoffered$2000toquit;only1%doso.Lifelongrelationshipsarethegoal:EmployeescomparisonshopotherWebsites;socialnetworkingisusedfordirectcontactwithcustomers;customerfeedbackandcriticismisstronglyencouragedandvalued.Copyright2011,PearsonEducationInc.PublishingasPrentice-Hall

1-4WhatIsMarketing?Simpledefinition:

Marketingismanagingprofitablecustomerrelationships.Goals:

Attractnewcustomersbypromisingsuperiorvalue.Keepandgrowcurrentcustomer-basebydeliveringsatisfaction.Copyright2011,PearsonEducationInc.PublishingasPrentice-Hall

1-5MarketingDefinedMarketingistheprocessbywhichcompaniescreatevalueforcustomersandbuildstrongcustomerrelationshipsinordertocapturevaluefromcustomersinreturn.OLDviewofmarketing:

Makingasale-“tellingandselling”NEWviewofmarketing:

Satisfying

customerneedsCopyright2011,PearsonEducationInc.PublishingasPrentice-Hall

1-6TheMarketingProcessAsimplemodelofthemarketingprocess:Understandthemarketplaceandcustomerneedsandwants.Designacustomer-drivenmarketingstrategy.Constructanintegratedmarketingprogramthatdeliverssuperiorvalue.Buildprofitablerelationshipsandcreatecustomerdelight.Capturevaluefromcustomerstocreateprofitsandcustomerequity.Copyright2011,PearsonEducationInc.PublishingasPrentice-Hall

1-7CoreConceptsMarketersmustunderstandfivecorecustomerandmarketplaceconcepts:Needs,wants,anddemandsMarketofferingsValueandsatisfactionExchangesandrelationshipsMarkets

Copyright2011,PearsonEducationInc.PublishingasPrentice-Hall

1-8Needs,Wants,andDemandsNeed:

Stateoffeltdeprivationincludingphysical,social,andindividualneeds.Physical,social,andindividualneedsWants:

Formthatahumanneedtakes,asshapedbycultureandindividualpersonality.Wants+BuyingPower=DemandCopyright2011,PearsonEducationInc.PublishingasPrentice-Hall

1-9MarketingOfferingsNeedsandwantsarefulfilledthroughaMarketingOffer:Somecombinationofproducts,services,information,orexperiencesofferedtoamarkettosatisfyaneedorwant.Copyright2011,PearsonEducationInc.PublishingasPrentice-Hall

1-10MarketOfferingsProducts:Persons,places,organizations,information,andideas.Services:Activityorbenefitofferedforsalethatisessentiallyintangibleanddoesnotresultinownership.Brandexperiences:Shouldimmersetheconsumerinthebrandexperienceandmaybeintenselypersonal.Copyright2011,PearsonEducationInc.PublishingasPrentice-Hall

1-11MarketingMyopiaMarketingmyopia:Occurswhensellerspaymoreattentiontothespecificproductstheyofferthantothebenefitsandexperiencesproducedbytheproducts.Theyfocusonthe“wants”andlosesightofthe“needs.”Copyright2011,PearsonEducationInc.PublishingasPrentice-Hall

1-12CustomerValueandSatisfactionCaremustbetakenwhensettingexpectationsformarketofferings:Ifperformanceislowerthanexpectations,satisfactionislow.Ifperformanceishigher

thanexpectations,satisfactionishigh.Copyright2011,PearsonEducationInc.PublishingasPrentice-Hall

1-13ExchangesandRelationshipsExchange:Actofobtainingadesiredobjectfromsomeonebyofferingsomethinginreturn.Relationships:Marketingactionsbuildandmaintainrelationshipswithtargetaudiencesinvolvinganidea,product,service,orotherobject.Valuebuildsrelationships.Copyright2011,PearsonEducationInc.PublishingasPrentice-Hall

1-14WhatIsaMarket?Amarket:Isthesetofactualandpotentialbuyersofaproduct.Thesepeopleshareaneedorwantthatcanbesatisfiedthroughexchangerelationships.Copyright2011,PearsonEducationInc.PublishingasPrentice-Hall

1-15ModernMarketingSystemsMainelementsinamodernmarketingsysteminclude:SuppliersCompany(marketer)CompetitorsMarketingintermediariesConsumersMajorenvironmentalforcesaffecteachelement.Copyright2011,PearsonEducationInc.PublishingasPrentice-Hall

1-16MarketingManagementTheartandscienceofchoosingtargetmarketsandbuildingprofitablerelationshipswiththem.Aimistofind,attract,keep,andgrowcustomersbycreating,delivering,andcommunicatingsuperiorvalue.Copyright2011,PearsonEducationInc.PublishingasPrentice-Hall

1-17MarketingManagementDesigningawinningmarketingstrategyrequiresanswerstothefollowingquestions: 1.

Whatcustomerswillweserve?

—Whatisourtargetmarket?2.

Howcanwebestservethese

customers?

—Whatisourvalueproposition?Copyright2011,PearsonEducationInc.PublishingasPrentice-Hall

1-18SelectingCustomerstoServeMarketsegmentation:Dividingthemarketintosegmentsofcustomers.Targetmarketing:Selectingoneormoresegmentstocultivate.Copyright2011,PearsonEducationInc.PublishingasPrentice-Hall

1-19ChoosingaValuePropositionThesetofbenefitsorvaluesacompanypromisestodelivertoconsumerstosatisfytheirneeds.Valuepropositionsdictatehowfirmswilldifferentiateandpositiontheirbrandsinthemarketplace.Copyright2011,PearsonEducationInc.PublishingasPrentice-Hall

1-20MarketingManagementOrientationsOrganizationsdesignandcarryouttheirmarketingstrategiesunderfivealternateconcepts:ProductionConceptProductConceptSellingConceptMarketingConceptSocietalMarketingConceptCopyright2011,PearsonEducationInc.PublishingasPrentice-Hall

1-21TheMarketingConceptThemarketingconcept:Amarketingmanagementphilosophythatholdsthatachievingorganizationalgoalsdependsonknowingtheneedsandwantsoftargetmarketsanddeliveringthedesiredsatisfactionbetterthancompetitors.

Copyright2011,PearsonEducationInc.PublishingasPrentice-Hall

1-22TheSocietal

MarketingConceptThesocietalmarketingconcept:Theideathatacompany’smarketingdecisionsshouldconsiderconsumers’wants,thecompany’sdesires,consumers’long-runinterests,andsociety’slong-runinterests.Copyright2011,PearsonEducationInc.PublishingasPrentice-Hall

1-23TheIntegratedMarketingPlanTransformsthemarketingstrategyintoaction.Includesthemarketingmixand4Psofmarketing:ProductPricePlace(Distribution)PromotionCopyright2011,PearsonEducationInc.PublishingasPrentice-Hall

1-24BuildingCustomerRelationshipsCustomerrelationshipmanagement:Theoverallprocessofbuildingandmaintainingprofitablecustomerrelationshipsbydeliveringsuperiorcustomervalueandsatisfaction.CRMdealswithallaspectsofacquiring,keeping,andgrowingcustomers.Customervalueandsatisfactionarekey.Copyright2011,PearsonEducationInc.PublishingasPrentice-Hall

1-25CustomerPerceivedValueCustomerperceivedvalue:Customer’sevaluationofthedifferencebetweenallofthebenefitsandallofthecostsofamarketingofferrelativetothoseofcompetingoffers.PerceptionsmaybesubjectiveTosomecustomers“value”mightmeanpayingmoretogetmore.Copyright2011,PearsonEducationInc.PublishingasPrentice-Hall

1-26CustomerSatisfactionCustomersatisfaction:Extenttowhichtheproduct’sperceivedperformancematchesabuyer’sexpectations.Highlevelsofcustomersatisfactionoftenleadstoconsumerloyalty.SomefirmsseektoDELIGHTcustomersbyexceedingexpectations.Profitabilitymustbeconsidered.Copyright2011,PearsonEducationInc.PublishingasPrentice-Hall

1-27CustomerRelationshipsFirmsmaychoosetobuildrelationshipsatdifferentlevels.Loyaltyandretentionprogramsbuildrelationshipsandmayinclude:FrequencymarketingprogramsClubmarketingprogramsCopyright2011,PearsonEducationInc.PublishingasPrentice-Hall

1-28ChangingNatureofRelationshipsCustomerprofitabilityanalysiseliminateslosingcustomersandselectsprofitableoneswithwhomrelationshipsshouldbedeveloped.Firmsrelatedmoredeeplyandinteractivelyviablogs,socialnetworkWebsites,e-mail,andvideosharing.Embracingcustomer-managedrelationshipsrequiresmarketingviaattractionratherthanintrusion.Consumer-generatedmarketinghasbecomeasignificantmarketingforce.Copyright2011,PearsonEducationInc.PublishingasPrentice-Hall

1-29PartnerRelationshipMarketingMarketingpartnershelpcreatecustomervalueandassistinbuildingcustomerrelationships.Partnersinsidethefirm:Cross-functionalcustomerteamsPartnersoutsidethefirm:SupplychainmanagementCopyright2011,PearsonEducationInc.PublishingasPrentice-Hall

1-30CapturingValueFromCustomersValueiscapturedfromcustomersviacurrentandfuturesales,marketshare,andprofit.Superiorcustomervalueleadstohighlysatisfiedloyalcustomerswhobuymore.Keyoutcomesofcustomervalueincludecustomerloyaltyandretention,shareofmarket,shareofcustomer,andcustomerequity.Copyright2011,PearsonEducationInc.PublishingasPrentice-Hall

1-31CustomerEquityThetotalcombinedcustomerlifetimevaluesofallthecompany’scurrentandpotentialcustomers.Manageequityby:Classifyingcustomersbyprojectedloyaltyandpotentialprofitability.Manageeachgroupaccordingly.

Copyright2011,PearsonEducationInc.PublishingasPrentice-Hall

1-32CapturingValueFromCustomersCustomerlifetimevalueThevalueoftheentirestreamofpurchasesthatthecustomerwouldmakeoveralifetimeofpatronage.ShareofcustomerTheportionofthecustomer’spurchasingthatacompanygetsintheirproductcategories.Copyright2011,PearsonEducationInc.PublishingasPrentice-Hall

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