Cost of Average Sales Call = $300 Average # Calls to Convert Customer = 4 Cost of New Customer = $1200 Annual Revenue from Customer = $5000 # Loyal Years = 2 Profit Margin = 10% Lifetime Value = $1000 Firm is spending more on attracting new customers than they are worth!
The focus of marketing concept is on customers’ needs and wants, not the product itself.
Scott
Sales
“We sell grass seeds and fertilizer.”
Disney “We run theme parks.”
Focus on product development, performance and features and the growth of large scale industrial empires
Transition from scarcity of goods to scarcity of market; market saturation with basics
Transition from Internal (Organization) to External (Customer) basis for guiding marketing decisions
Relative Time & Span
Basic Managerial Objective
Industrial Profit maximization via Revolution economies of scale
Profit maximization through superior product performance
Profit maximization via demand generation
1990s
Profit maximization via matching of products to customer wants
Introduction to Buisiness
6
The Marketing Concept (Cont’d)
Sales Concept vs. Marketing Concept
Focus Sales Concept Products
Marketing concept
Customer needs
Cost of Lost Customers # Accounts = 64000 Loss = 5% for poor service = 3200 accounts Loss in Revenue / Account = $40000 Total Revenue Loss = $ 128 MM Margin = 10% Loss in Profits = $ 12. 8 MM How to Increase Retention Rate?
Introduction to Buisiness
9
Customer Satisfaction & Profits
Profits through customer satisfaction (one customer)
Referrals
Price premium
Reduced selling efforts Increased usage
Introduction to Buisiness
4
Company Orientations Towards the Marketplace
Orientation
Description
Production Product & Financial Sales
Marketing
Transition from home manufacturing to factories
Marketing
“We offer you a green, healthy yard.”
“We offer you a dreamy, fantastic experience.”
Introduction to Buisiness
8
Customer Satisfaction & Dow Jones
Means
Selling & promotion
Integrated marketing
End
Profits through sales volume
Profits through customer satisfaction
Introduction to Buisiness
7
Marketing Focus vs. Sales Focus
Marketing: Background & Concepts
Introduction to Buisiness
1
Objectives of Marketing
Increase the number of customers Increase the average transaction amount Increase the frequency of repurchase Build company image, credulation, etc.
Introduction to Buisiness
5
The Marketing Concept
Meeting the needs and wants of customers
A customer orientation
Backed by integrated marketing
Aimed at generating customer satisfaction & repurchase as the key to satisfying the organizational goals
Normal profits
Normal profits
Referrals Price premium Reduced selling efforts Increased usage
Acquisition
ห้องสมุดไป่ตู้costs
Introduction to Buisiness
10
Cost of Losing/Attracting Customers