{"id":6266,"date":"2016-08-17T17:28:15","date_gmt":"2016-08-17T17:28:15","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/masterybusiness2xngcxmasterspring2016\/?post_type=chapter&p=6266"},"modified":"2019-01-05T01:41:50","modified_gmt":"2019-01-05T01:41:50","slug":"reading-marketing-and-customer-relationships","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/wmintrobusiness\/chapter\/reading-marketing-and-customer-relationships\/","title":{"raw":"Reading: Marketing and Customer Relationships","rendered":"Reading: Marketing and Customer Relationships"},"content":{"raw":"

Why Customers Matter<\/h2>\r\nMarketing exists to help organizations understand, reach, and deliver\u00a0value to\u00a0their customers. For this reason, the customer is considered the cornerstone of marketing.\r\n\r\nWith this in mind, what is likely to happen when an organization\u00a0doesn\u2019t understand or pay attention to what its customers want? What if an organization doesn\u2019t even really understand who its customers\u00a0are?\r\n\r\nOne of the world\u2019s best-known brands, Coca-Cola, provides a high-profile example of misunderstanding customer \u201cwants.\u201d \u00a0In the following video, Roberto Goizueta\u2014in his only on-camera interview on this topic\u2014recounts the disastrous launch of New Coke in 1985 and describes the lessons the company learned. Goizueta was chairman, director, and chief executive officer of the Coca-Cola Company from August 1980 until his death in October 1997.\r\n\r\nhttps:\/\/youtu.be\/BmQs8g9ytRA\r\n

Customer Relationship Management: A Strategic Imperative<\/h2>\r\nWe have stated that the central purpose of marketing is to help organizations identify, satisfy, and retain their customers. These three activities lay the groundwork for what has become a strategic imperative in modern marketing: customer relationship management.\r\n\r\nTo a student of marketing in the digital age, the idea of relationship building between customers and companies may seem obvious\u00a0and commonplace. It certainly is a\u00a0natural\u00a0outgrowth of the marketing concept, which orients entire organizations around understanding and addressing customer needs. But only in recent decades has technology made it possible for companies to capture and utilize information about their customers to such a great extent and in such meaningful ways. The Internet and digital social media have created new platforms for customers and product providers to find and communicate with\u00a0one\u00a0another. As a result, there are more tools now than ever before to help companies create, maintain, and manage customer relationships.\r\n

Maximizing Customer Lifetime Value<\/h3>\r\nCentral to these developments is the concept of customer lifetime value. Customer lifetime value predicts how much profit is associated with a customer during\u00a0the course of their lifetime relationship with a company.[footnote]http:\/\/dictionary.cambridge.org\/us\/dictionary\/english\/customer-lifetime-value[\/footnote]<\/a><\/span>\u00a0One-time customers usually have a relatively low customer lifetime value, while frequent, loyal, repeat-customers typically have a high customer lifetime value.\r\n\r\nHow do\u00a0companies develop strong, ongoing relationships with customers who are likely to have a high customer lifetime value? Through marketing, of course.\r\n\r\nMarketing applies a customer-oriented mindset and, through particular marketing activities, tries to make initial contact with customers and move them through various stages of the relationship\u2014all with the goal of increasing lifetime customer value. These activities are summarized in the table below.\r\n
\r\n\r\n\r\n\r\n\r\n\r\n\r\n
Relationship Stage<\/strong><\/td>\r\nTypical Marketing Activities<\/strong><\/td>\r\n<\/tr>\r\n
Meeting and Getting Acquainted<\/td>\r\n\r\n
    \r\n \t
  • Find desirable target customers, including those likely to deliver a high customer lifetime value<\/li>\r\n \t
  • Understand what these customers want<\/li>\r\n \t
  • Build awareness and demand for what you offer<\/li>\r\n \t
  • Capture new business<\/li>\r\n<\/ul>\r\n<\/td>\r\n<\/tr>\r\n
Providing a Satisfying Experience<\/td>\r\n\r\n
    \r\n \t
  • Measure and improve customer satisfaction<\/li>\r\n \t
  • Track how customers\u2019 needs and wants evolve<\/li>\r\n \t
  • Develop customer confidence, trust, and goodwill<\/li>\r\n \t
  • Demonstrate and communicate competitive advantage<\/li>\r\n \t
  • Monitor and counter competitive forces<\/li>\r\n<\/ul>\r\n<\/td>\r\n<\/tr>\r\n
Sustain a Committed Relationship<\/td>\r\n\r\n