Summary
Summary of Chapter 11
- Course
- Business Management 113
- Institution
- Stellenbosch University (SUN)
Summary of Chapter 11
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CHAPTER 11Marketing: The activity, set of institutions and processes for
creating, communicating, delivering and exchanging
offerings that have value for customers, clients, partners
and society at large
Value: A customers estimation of the worth of a product based on a
comparison of its costs and benefits, including quality, relative to other
products.
MANAGING CUSTOMER RELATIONSHIPS
Relationship
Relationship marketing refers to marketing decisions and
marketing
activities focused on achieving long-term, satisfying relationships
Establishing long
with customers. Relationship marketing continually deepens the
term, mutually
buyer’s trust in the company, which, as the customer’s loyalty
satisfying buyer-seller
grows, increases a company’s understanding of the customer’s
relationships
needs and desires. Successful marketers respond to customers’
needs and strive to continually increase value to buyers over
Customer
time. Eventually, this interaction becomes a solid relationship that
relationship
fosters cooperation and mutual trust. The internet has
management (CRM)
expanded and improved relationship marketing options for
Using information
many firms by making targeted communication faster, cheaper
about customers to
and easier. Digital technologies allow firms to connect to
create marketing
consumers and have a dialogue with them in real time. This not
strategies that
only improves the speed at which firms can innovate but also
develop and sustain
consumers are satisfied because they feel the firm is listening to
desirable customer
them.
relationships
To build long-term customer relationships, marketers are Customer lifetime
increasingly turning to marketing research and information value (CLV)
technology. Customer relationship management (CRM) A measure of a
focuses on using information about customers to create
marketing strategies that develop and sustain desirable customer relationships.
By increasing customer value over time, organizations try to retain and increase
long-term profitability through customer loyalty.
Managing customer relationships requires identifying patterns of buying
behaviour and using this information to focus on the most promising and
profitable customers. Companies must be sensitive to customers’ requirements
and desires and establish communication to build customers’ trust and loyalty. In
some instances, it may be more profitable for a company to focus on satisfying a
valuable existing customer than to attempt to attract a new one who may never
develop the same level of loyalty.
The customer lifetime value (CLV) is a measure of a customer’s worth (sales
minus costs) to a business during one’s lifetime. There are also intangible
benefits of retaining lifetime-value customers, such as their ability to provide
feedback to a company and refer new customers of similar value. In general
, when marketers focus on customers chosen for their lifetime value, they earn
higher profits in future periods than when they focus on customers.
- Slide show definition: A combination of purchase frequency, average value of
purchases, and brand-switching patterns over the entire span of a customer’s
relationship with a company.
UTILITY: THE VALUE ADDED BY MARKETING
Utility is the ability of a good or service to satisfy a human need. The latest
iPhone, Nike air max or BMW luxury cars all satisfy human needs. Thus each
possess utility.
There are four kinds of utility:
1. Form utility is created by converting production inputs into finished
products. Marketing efforts may influence form utility indirectly because
the data gathered as part of marketing research are frequently used to
determine the size, shape and features of a product.
The three kinds of utility that are created directly by marketing are:
2. Place utility is created by making a product available at a location where
customers wish to purchase it.
3. Time utility is created by making a product available when customers
wish to purchase it. For example, a Halloween costume may be
manufactured in April but not displayed until September, when customers
start buying them.
4. Possession utility is created by transferring title (ownership) of a
product to buyer.
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