Chapter 14
MANAGING CUSTOMER RELATIONSHIPS
Relationship marketing refers to marketing decisions and activities focused on
achieving long-term, satisfying relationships with customers. Relationship marketing
continually deepens the buyer’s trust in the company, which, as the customer’s
loyalty grows, increases a company’s understanding of the customer’s needs and
desires. Successful marketers respond to customers’ needs and strive to continually
increase value to buyers over time.
To build long-term customer relationships, marketers are increasingly turning to
marketing research and information technology. Customer relationship
management (CRM) 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 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.
UTILITY: THE VALUE ADDED BY MARKETING
Utility is the ability of a good or service to satisfy a human need.
Form utility is created by converting production inputs into finished products.
The three kinds of utility that are created directly by marketing are:
1.Place utility is created by making a product available at a location where
customers wish to purchase it.
2.Time utility is created by making a product available when customers wish to
purchase it.
3.Possession utility is created by transferring title (ownership) of a product to
buyer.
customers.
relationships.
lifetime.
need.
finished products.