Page 48 - Foundations of Marketing

Customer-Driven Strategic Marketing | Chapter 1 15

external environment can often predict major changes and adapt successfully. For instance,
while the majority of Internet companies failed after the dot-com bubble burst in 2000,
Amazon.com continued to thrive because it understood its customers and had created a
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website customized to their wants. The company continues to expand its products and add
new features to its website to serve its customers better. On the other hand, when Hewlett-
Packard announced it intended to sell its personal computer business, company share prices
plummeted. Investors felt HP’s livelihood depended upon its PC sales. Additionally, because
personal computers are such an integral part of HP, such a decision would require major
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changes in company operations and strategic direction. The plan was eventually scrapped.
If marketing is not included in the organization’s top-level management, a company could
fail to address actual customer needs and desires. Implementing the marketing concept
demands the support not only of top management but also of managers and staff at all levels
of the organization.

CUSTOMER RELATIONSHIP LO 3 . Understand the impor-
tance of building customer
MANAGEMENT relationships.

Customer relationship management (CRM) focuses on using information about custom-
ers to create marketing strategies that develop and sustain desirable customer relationships.
Achieving the full profit potential of each customer relationship should be the fundamental
goal of every marketing strategy. Marketing relationships with customers are the lifeblood
of all businesses. At the most basic level, profits can be obtained through relationships in the
following ways: (1) by acquiring new customers, (2) by enhancing the profitability of existing
customers, and (3) by extending the duration of customer relationships. In addition to retain-
ing customers, companies also should focus on regaining and managing relationships with
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customers who have abandoned the firm. Implementing the marketing concept means opti-
mizing the exchange relationship, otherwise known as the relationship between a company’s
financial investment in customer relationships and the return generated by customers’ loyalty
and retention.
Maintaining positive relationships with customers is an important goal for market-
ers. The term relationship marketing refers to “long-term, mutually beneficial arrange-
ments in which both the buyer and seller focus on value enhancement through the creation
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of more satisfying exchanges.” Relationship marketing continually deepens the buyer’s
trust in the company, and as the customer’s confidence grows, this, in turn, increases the
firm’s understanding of the customer’s needs. Buyers and marketers can thus enter into a
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close relationship in which both participate in the creation of value. Successful marketers
respond to customer needs and strive to increase value to buyers over time. Eventually, this
interaction becomes a solid relationship that allows for cooperation and mutual depen-
dency. Whole Foods has implemented relationship marketing with the view that customers
are its most important stakeholder. One of the company’s core values involves “satisfying
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the customer first.”
Relationship marketing strives to build satisfying exchange relationships between buyers
and sellers by gathering useful data at all customer contact points and analyzing that data to
customer relationship
better understand customers’ needs, desires, and habits. It focuses on building and using data-
management (CRM) Using
bases and leveraging technologies to identify strategies and methods that will maximize the
information about customers to
lifetime value of each desirable customer to the company. It is imperative that marketers edu-
create marketing strategies that
cate themselves about their customers’ expectations if they are to satisfy their needs; customer develop and sustain desirable
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dissatisfaction will only lead to defection. customer relationships
To build these long-term customer relationships, marketers are increasingly turning to
relationship marketing
marketing research and information technology. By increasing customer value over time, orga- Establishing long-term,
nizations try to retain and increase long-term profitability through customer loyalty, which mutually satisfying buyer–seller
results from increasing customer value. The airline industry is a key player in CRM efforts relationships

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