1. Building Customer Relationships Through Effective Marketing
Chapter Twelve
Building Customer Relationships Through Effective Marketing

2. Learning Objectives
Understand the meaning of marketing and the importance of management of customer relationships.
Explain how marketing adds value by creating several forms of utility.
Trace the development of the marketing concept and understand how it is implemented.
Understand what markets are and how they are classified.
Identify the four elements of the marketing mix and be aware of their importance in developing a marketing strategy.

3. Learning Objectives
Explain how the marketing environment affects strategic market planning.
Understand the major components of a marketing plan.
Describe how market measurement and sales forecasting are used.
Distinguish between a marketing information system and marketing research.
Identify the major steps in the consumer buying decision process and the sets of factors that may influence this process.

4. Marketing
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

5. Managing Customer Relationships
Relationship marketing: Establishing long-term mutually satisfying buyer-seller relationship
Customer relationship management (CRM): Using information about customers to create marketing strategies that develop and sustain desirable customer relationships
Customer lifetime value: 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

6. Exchange Between Buyer and Seller
Source: William M. Pride and O. C. Ferrell, Marketing: Concepts and Strategies, 15th ed. (Mason. Ohio: South-Western/Cengage Learning, Adapted with permission.

7. Major Marketing Functions

8. Utility: The Value Added by Marketing
The ability of a good or service to satisfy a human need
Form utility: Created by converting production inputs into finished products
Place utility: Created by making a product available at a location where customers wish to purchase it
Time utility: Created by making a product available when customers wish to purchase it
Possession utility: Created by transferring title (ownership) of a product to buyer

9. Types of Utility

10. The Marketing Concept
A business philosophy that involves the entire organization in the process of satisfying customers’ needs while achieving the organization’s goals
To achieve success, a business must
Talk to its potential customers to assess their needs
Develop a good or service to satisfy those needs
Continue to seek ways to provide customer satisfaction

11. Implementing the Marketing Concept
Obtain information about present and potential customers
Their needs; how well those needs are being satisfied; how products might be improved; customer opinions about the firm
Pinpoint specific needs and potential customers toward which to direct marketing activities and resources

12. Implementing the Marketing Concept
Mobilize marketing resources to
Provide a product that will satisfy customers
Price the product at an acceptable and profitable level
Promote the product to potential customers
Ensure distribution for product availability when and where wanted
Obtain information on the effectiveness of the marketing effort and modify efforts as necessary

13. Markets and Their Classification
A group of individuals or organizations, or both, that need products in a given category and that have the ability, willingness, and authority to purchase such products
Consumer markets
Purchasers and/or households members who intend to consume or benefit from the purchased products and who do not buy products to make a profit
Business-to-business (industrial) markets
Producer, reseller, governmental, and institutional customers that purchase specific kinds of products for use in making other products for resale or for day-to-day operations

14. Developing Marketing Strategies
Marketing strategy
A plan that will enable an organization to make the best use of its resources and advantages to meet its objectives
Consists of
The selection and analysis of a target market
The creation and maintenance of an appropriate marketing mix (a combination of product, price, distribution, and promotion developed to satisfy a particular target market)

15. Developing Marketing Strategies (cont’d)
Target market selection and evaluation
Target market
A group of individuals, organizations, or both, for which a firm develops and maintains a marketing mix suitable for the specific needs and preferences of that group
Market segment
A group of individuals or organizations within a market that share one or more common characteristics
Market segmentation
The process of dividing a market into segments and directing a marketing mix at a particular segment or segments rather than at the total market

16. Common Bases of Market Segmentation
Source: William M. Pride and O. C. Ferrell, Marketing: Concepts and Strategies, 15th ed. (Mason, Ohio: South-Western/Cengage Learning, 2010). Adapted with permission.

17. Advertisers’ Classification of Audiences
Name
Age
(2003)
Needs
Influencer
Millennials
<25
Tech Savvy
Grew up in prosperous times
Gen Xers
25-38
Media Savvy
Grew up in economic downturn
Boomers
39-58
Avid Consumers
Deny aging process
Matures
57+
Practical, pragmatic
Money conscious
Source: “Audience Research,” MediaKnowAll,

18. The Marketing Mix and the Marketing Environment
Source: William M. Pride and O. C. Ferrell, Marketing: Concepts and Strategies, 15th ed. (Mason, Ohio;: South-Western/Cengage Learning 2010). Adapted with permission.

19. Developing a Marketing Plan
A written document that specifies an organization’s resources, objectives, strategy, and implementation and control efforts to be used in marketing a specific product or product group
Elements of a marketing plan
Executive summary
Environmental analysis
Strengths and weaknesses
Opportunities and threats
Marketing objectives
Marketing strategies
Marketing implementation
Evaluation and control

20. Market Measurement and Sales Forecasting
An estimate of the amount of a product that an organization expects to sell during a certain period of time based on a specified level of marketing effort
Importance of measuring sales potential
Evaluate feasibility of enter new segments
Decide how best to allocate marketing resources and activities
Estimates should do several things
Identify the relevant time frame covered by the forecast
Define the geographic boundaries of the forecast
Indicate for which products the forecasts are relevant

21. Marketing Information
Marketing information system
A system for managing marketing information that is gathered continually from internal and external sources
Internal data sources
Sales figures, product and marketing costs, inventory, sales force activities
External data sources
Suppliers, intermediaries, customers, competitors, economic conditions
Outputs
Sales reports, sales forecasts, buying trends, market share

22. Marketing Information
The six steps of marketing research
Define the problem
Make a preliminary investigation
Plan the research
Gather factual information
Interpret the information
Reach a conclusion

23. Debate Issue: Does Marketing Research Invade a Respondent’s Privacy?
YES
A great deal of marketing research asks questions that are too personal.
Some marketing research, especially telephone and personal interviews, is nothing more than a disguise for sales presentations.
The information obtained from marketing research is often used to develop mailing lists that are used to sell consumers products that they may not want.
Sometimes the true nature of the research is disguised to get consumers to respond. NO
The right to privacy deals with an individual’s ability to restrict personal information.
Individual respondents must decide for themselves how much of their personal lives they will share with others.
What constitutes private information and public information is ultimately up to the individual respondent.
As long as the researcher obtains the consent of the respondent, the research does not invade the respondent’s privacy.

24. Types of Buying Behavior
The decisions and actions of people involved in buying and using products
Consumer buying behavior
The purchasing of products for personal or household use, not for business purposes
Business buying behavior
The purchasing of products by producers, resellers, governmental units, and institutions

25. Consumer Buying Decision Process and Possible Influences on the Process
Source: William M. Pride and O. C. Ferrell, Marketing: Concepts and Strategies, 15th ed. (Mason, Ohio;: South-Western/Cengage Learning 2010). Adapted with permission.

26. Business Buying Decision Process and Possible Influences on the Process
Source: William M. Pride and O. C. Ferrell, Marketing: Concepts and Strategies, 13th ed. Copyright © 2006 by Houghton Mifflin Company, Adapted with permission.

27. The American Consumer Consumer income Personal income
The income an individual receives from all sources less the Social Security taxes the individual must pay
Disposable income
Personal income less all additional personal taxes
Discretionary income
Disposable income less savings and expenditures on food, clothing, and housing

28. Why Do Consumers Buy? They have a use for the product
They like the convenience a product offers
They believe the purchase will enhance their wealth
They take pride in ownership
They buy for safety

29. What Do Consumers Buy? Average Annual Expenditures
Source: 2008 Statistical Abstract of the United States, Expenditures by Type, 2005;

30. Where Do Consumers Buy? Influences on where to buy
Perception of the store
General impressions of an establishment’s products, prices, and sales personnel
Types of retail outlets
Specialty store, department store, discount store
Location
Product assortment
Services such as credit terms, return privileges, free delivery

31. When Do Consumers Buy? Online When buying is most convenient
Hours have stretched to include evenings, holidays, and Sundays
Many online catalog companies now offer twenty-four hours a day, seven days a week access

32. Chapter Quiz
The utility created by transferring title of a product to the buyer is called __________ utility.
form
time
production
place
possession
J.C. Penney is considered to be a member of which type of market?
Business-to-business
Reseller
Consumer
Producer
Institutional

33. Chapter Quiz
The ingredient of the marketing mix concerned with product design, brand names, packaging, and warranties is
pricing.
quality.
product.
distribution.
promotion.
All of the following are true of marketing plans except that they should
not be modified.
include details of task scheduling.
specify task objectives.
describe the firm’s current situation.
focus on a particular product or product group.

34. Chapter Quiz In this chapter, MIS refers to _______ system.
merged information
major information
marketing information
market influential segmentation
minor information

35. Answers to Chapter Quiz
The utility created by transferring title of a product to the buyer is called __________ utility.
form
time
production
place
possession (Correct)
J.C. Penney is considered to be a member of which type of market?
Business-to-business
Reseller (Correct)
Consumer
Producer
Institutional

36. Answers to Chapter Quiz
The ingredient of the marketing mix concerned with product design, brand names, packaging, and warranties is
pricing.
quality.
product. (Correct)
distribution.
promotion.
All of the following are true of marketing plans except that they should
not be modified. (Correct)
include details of task scheduling.
specify task objectives.
describe the firm’s current situation.
focus on a particular product or product group.

37. Answers to Chapter Quiz
In this chapter, MIS refers to _________ system.
merged information
major information
marketing information (Correct)
market influential segmentation
minor information