1. Copyright © 2015 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Marketing: Helping Buyers Buy CHAPTER 13

2. WHAT’S MARKETING? According to the American Marketing Association… 13-2 LO 13-1 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

3. MARKETING?: A Better Definition Process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to facilitate exchanges that satisfy customer needs and organization objectives 13-3 LO 13-1 Facilitate Exchanges (Encourage Purchase) Satisfy Customer Needs Product PricingPromotionPlace IdeasServicesGoods 2 Important Functions

4. MARKETING FUNDAMENTALS 13-4 LO 13-1

5. FOUR ERAS of U.S. MARKETING 13-5 Production Era Selling Era Marketing Concept Era Customer Relationship Era LO 13-1

6. The PRODUCTION and SELLING ERAS 13-6 The general philosophy was “Produce what you can because the market is limitless.” After mass production, the focus turned from production to persuasion. LO 13-1

7. After WWII, a consumer spending boom developed. Businesses knew they needed to be responsive to consumers if they wanted their business. The MARKETING CONCEPT ERA 13-7 LO 13-1

8. APPLYING the MARKETING CONCEPT 13-8 LO 13-1 The Marketing Concept is a business philosophy that a firm should continually try to offer products that satisfy customers needs while also making a business profit The Marketing Concept includes three parts: 1. Customer Orientation -- Finding out what customers want and then providing it. 2. Service Orientation -- Making sure everyone in an organization is committed to customer satisfaction. 3. Profit Orientation -- Focusing on the goods and services that will earn the most profit.

9. The CUSTOMER RELATIONSHIP ERA CRM is the process of establishing mutually-beneficial long-term relationships with individual customers to foster loyalty and repeat business 13-9 LO 13-1 Good CRM incorporates technologies and information that allows businesses to develop marketing strategies to sustain long-term customer relationships

10. The cost of acquiring a new customer is 5x the cost of retaining one. Here’s how to keep them: SERVICE with a SMILE Six Steps for Keeping Your Customers Happy 13-10 Source: Inc. Guidebook, Vol. 2 No. 5. LO 13-1 1. Build trust 2. Emphasize the long term 3. Listen 4. Treat your customers like stars 5. Show appreciation 6. Remember employees are customers too!

11. UNDERSTANDING TODAY’S CUSTOMERS 13-11 LO 13-1 Today’s Customers are: Sophisticated Demanding Price Sensitive Why is Customer Satisfaction Important? Getting new customers costs more than keeping them. Long-term customers boost profits. Satisfied customers tell their friends. Customers pay more for good service. Unhappy customers spread the word.

12. The EMERGING MOBILE MARKETING ERA 13-12 LO 13-1 As digital technology continues to grow, consumer demands are expected to rise in: 1. Now: Consumers want to interact anywhere, anytime. 2. Can I?: They want to use information in new ways that create value for them. 3. For me: Consumers expect personalized experiences. 4. Simply: Consumers want all interactions to be easy.

13. Nonprofit marketing tactics include: NONPROFIT MARKETING 13-13 LO 13-1  Fundraising  Public Relations  Special Campaigns  Ecological practices  Changing public opinions and attitudes  Increasing organizational membership

14. The FOUR P’s of Marketing (AKA THE MARKETING MIX) 13-14 LO 13-2

15. THE MARKETING MIX 13-15 LO 13-2 Product differentiation Brand Product Cover costs Competitively priced Price Inform and persuade customers to buy Build positive customer relationships Promotion Distribution channel Distributors and wholesalers Place Product Decisions about product’s design, purpose, brand name, packaging, and warranties Promotion Decisions that sellers use to persuade and communicate to people to buy their products / services Place (Distribution) Decisions based on moving products from producers to consumers (marketing channels) Price Decisions based on price setting (what to charge for product) including rebates, and discounts

16. Product -- A good, service, or idea that satisfies a consumer’s want or need. DEVELOPING a PRODUCT 13-16 LO 13-2 Test Marketing -- Testing product concepts among potential product users. Brand Name -- A word, letter, or a group of words or letters that differentiates one seller’s goods from a competitor’s.

17. PRICING and PLACING a PRODUCT 13-17 LO 13-2 Pricing products depends on many factors:  Competitors’ prices  Production costs  Distribution  High or low price strategies Middlemen are important in place strategies because getting a product to consumers is critical.

18. PROMOTING the PRODUCT 13-18 Photo Courtesy of: Uri Baruchin LO 13-2 Promotion -- All the techniques sellers use to inform people about their products and motivate them to purchase those products. Promotion includes:  Advertising  Personal selling  Public relations  Word of mouth  Sales promotions

19. MARKETING: HOW TO GET INFORMATION 13-19 LO 13-3 Marketing Research -- Analyzing markets to determine challenges and opportunities, and finding the information needed to make good decisions. Research is used to identify products consumers have used in the past and what they want in the future. Research uncovers market trends and attitudes held by company insiders and stakeholders. FOUR STEPS IN MARKETING RESEARCH PROCESS 1. Defining the problem or opportunity and determining the present situation. 2. Collecting research data. 3. Analyzing the data. 4. Choosing the best solution and implementing it. Identify external opportunities Monitor and predict customer behavior Evaluate and improve marketing mix Marketing research involves gathering, interpreting, and applying information to uncover opportunities and challenges Why to find information? 1.Secondary Data – Information that already exists, has already been collected 2.Primary Data – Information collected specific to the problem

20. Environmental Scanning -- The process of identifying factors that affect marketing success. THE MARKETING ENVIRONMENT 13-20 LO 13-4 Factors involved in the environmental scan include:  Global factors  Technological factors  Sociocultural factors  Competitive factors  Economic factors

21. The MARKETING ENVIRONMENT 13-21 LO 13-4

22. MARKETS AND THEIR CLASSIFICATION 13-22 LO 13-4 Market 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 2 Main Types of Markets 1.Consumer markets Purchasers and/or household members who intend to consume or benefit from the purchased products and who do not buy products to make a profit 2. Business-to-business (B2B) (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

23. MARKETING STRATEGY: A formal plan that will enable an organization to make the best use of its resources and advantages to meet its objectives 13-23 LO 13-4 Consists of 2 Basic Steps: 1. Identify your Target Market – the specific group of potential customers on which a firm directs its marketing efforts 1. Create your Marketing Mix – the combination of controllable elements of a marketing plan designed to serve a target market, including product, price, distribution and promotion

24. MARKETING to CONSUMERS 13-24 LO 13-5  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

25. A WELL CHOSEN TARGET MARKET 13-25 LO 13-5  Size: There must be enough people in your target group to support a business  Profitability: The people must be willing and able spend more than the cost of producing and marketing the product  Accessibility: Your target must be reachable through channels that your business can afford  Limited Competition: Look for markets with limited competition; a crowded market is tough to crack

26. SEGMENTING the CONSUMER MARKET 13-26 LO 13-5

27. SEGMENTING the CONSUMER MARKET 13-27 LO 13-5

28. SEGMENTING the CONSUMER MARKET 13-28 LO 13-5

29. Niche Marketing -- Identifies small but profitable market segments and designs or finds products for them. MARKETING to SMALL SEGMENTS 13-29 LO 13-5 One-to-One Marketing-- Developing a unique mix of goods and services for each individual consumer.

30. MASS MARKETING vs. RELATIONSHIP MARKETING 13-30 LO 13-5 Mass Marketing -- Developing products and promotions to please large groups of people. Relationship Marketing-- Rejects the idea of mass production and focuses toward custom-made goods and services for customers.

31. STEPS in the CONSUMER DECISION-MAKING PROCESS 13-31 LO 13-5 1. Problem recognition 2. Search for information 3. Evaluating alternatives 4. Purchase decision 5. Postpurchase evaluation

32. KEY FACTORS in CONSUMER DECISION-MAKING 13-32 LO 13-5 Learning Reference Groups Culture Subcultures Cognitive Dissonance

33. TURNING NEGATIVES to POSITIVE 13-33 Online product reviews have changed the consumer decision-making process. But the reviews are not always valid because they could be written about the experience instead of the product. Amazon hopes to correct this issue and has started a program in which the site’s most trusted reviewers are sent products to write about.

34. TOP MARKETING CHALLENGES 13-34 LO 13-5 Marketing can be challenging in both the B2C and B2B markets. Common issues are:  Brand awareness  Social media  Converting leads into customers  Budgeting  Increasing profit Source: Entrepreneur, www.entrepreneur.com, accessed November 2014.www.entrepreneur.com

35. BUSINESS-to-BUSINESS MARKET (B2B) 13-35 LO 13-6 B2B marketers include:  Manufacturers  Wholesalers and retailers  Hospitals, schools and charities  Government Products are often sold and resold several times before reaching final consumers.

36. B2B MARKET DIFFERENCES 13-36 LO 13-6