1. Customer-Driven Marketing11
Chapter
Customer-Driven Marketing

2. Learning Objectives Define marketing.1
Define marketing.
Discuss the evolution of the marketing concept.
Summarize consumer behavior.
Describe marketing research. 5
Explain market segmentation.
List the steps in building a marketing strategy.
Discuss relationship marketing. 2 6 3 7 4

3. What Is Marketing?
Marketing- set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.
Marketing begins with discovering unmet customer needs and continues with researching the potential market; producing a good or service capable of satisfying the targeted customers; and promoting, pricing, and distributing that good or service.
Throughout the entire marketing process, a successful organization focuses on building customer relationships.
The best marketers not only give consumers what they want but even anticipate consumers’ needs before those needs surface.
Every organization (profit and non-profit) must market. Marketing is more than just selling. It is research, production, promotion, pricing, and distribution. The exchange process is much more complicated than buying a product you “need.” Facilitating and creating this exchange process is a big part of marketing.

4. Marketing Creates Utility
Exchange process - activity in which two or more parties give something of value to each other to satisfy perceived needs.
Utility - power of a good or service to satisfy a want or need
Create time utility by making a good or service available when customers want to purchase it.
Create place utility by making a product available in a location convenient for customers.
Create ownership utility through an orderly transfer of goods and services from the seller to the buyer.
Many organizations are attempting to create by the marketing function all three types of utility. A company’s production function creates form utility by converting raw materials, component parts, and other inputs into finished goods and services.

5. Evolution of the Marketing Concept
Production Era – “A good product will sell itself”
Sales Era – Energetic sales efforts will convince people to buy
Marketing Era – The consumer is king! Find a need and fill it.
Relationship Era – Satisfy your customers and build long term relationships
Social Era – Use the Internet and social media to market goods and services
Marketing has always been a part of business, but it has changed over the centuries. In the 1950s, the marketing era started and organizations began to adopt a consumer orientation. This focus has intensified in recent years, leading to the emergence of the relationship era in the 1990s. In the relationship era, companies emphasize customer satisfaction and building long-term business relationships. Today, the social era is in full swing thanks to the internet and social media sites like Twitter and Facebook.

6. Emergence of the Marketing Concept
Marketing concept- company-wide consumer orientation to promote long-run success.
Firm starts with analysis of customers’ needs and works backward to offer products that fulfill them.
There is strong competition to satisfy customers. Therefore, organizations must focus on the long-term value of customers and their needs.

7. Determining What Customers Want
Consumer behavior - actions of consumers involved in obtaining, consuming, and disposing of products and the decision processes that precede and follow these actions
Personal factors: needs and motives, perceptions, attitudes, self-concept
External factors: economic events
Business buying behavior - often includes a variety of influences from multiple decision makers
Consumer and business behavior differ but the key focus is on determining what the customer wants, what drives the customer. There may be a combination of personal and external factors.

8. Marketing Research
Marketing research – the process of collecting and evaluating information to support marketing decision making
Data mining – computer searches of customer data to detect patterns and relationships
Business intelligence – activities and technologies for gathering, storing, and analyzing data to make better competitive decisions
Market research must be obtained and applied to aid in making good marketing decisions, creating an effective strategy, and building a strong marketing mix. Marketers may access internal or external data to make marketing decisions. The more data they have and use, the better their marketing decisions. Some organizations gather large amounts of business intelligence to help make competitive decisions. Data mining uses data warehouses, sophisticated customer databases that allow managers to combine data from several different organizational functions. Click AC Nielsen to look at the marketing research the firm offers.

9. Market Segmentation
Market segmentation – the process of dividing a total market into several relatively homogeneous groups.
Market segmentation is often based on marketing research. Market segmentation attempts to isolate traits that distinguish a certain group of customers from the overall market. These are some criteria that marketers consider when segmenting markets.
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10. How Market Segmentation Works
Market segmentation depends on the product and the target market. Common bases for segmenting consumer markets are geographical, demographic, psychographic, and product-related. Business products are segmented into customer-based, end-use, and geographical. The effectiveness of a segmentation strategy depends on how well the market meets these criteria. Once marketers identify a market segment to target, they can create an appropriate marketing strategy.

11. Steps in Consumer Behavior
Consumer decisions follow sequential steps while being influenced by interpersonal and personal determinants.

12. Selecting Target Markets
Target market- group of people toward whom an organization markets its goods, services, or ideas with a strategy designed to satisfy their specific needs and preferences.
Types of Markets
consumer (B2C) product: good or service that is purchased by end users
business (B2B) product: good or service purchased to be used, either directly or indirectly, in the production of other goods for resale
Selecting the target market is very important as then an organization can concentrate its financial and time resources in going after this market. Markets can be classified by type of product– consumer and business.

13. Marketing Mix
Marketing Mix blends the four strategies to fit the needs and preferences of a specific target market.
Product strategy involves the nature of the product and its package design, brand names, trademarks, and product image.
Distribution strategy ensures that customers receive their purchases in the proper quantities at the right times and locations.
Promotional strategy blends advertising, personal selling, sales promotion, and public relations to achieve its goals of informing, persuading, and influencing purchase decisions.
Pricing strategy is setting profitable and justifiable prices for the firm’s product offerings, sometimes subject to government scrutiny.
The marketing mix is a blend of the four elements of marketing strategy—product, distribution, promotion, and pricing—to satisfy chosen customer segments. Marketers mix these strategies to communicate to the target market.
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14. Relationship Marketing
Relationship marketing- developing and maintaining long-term, cost-effective exchange relationships with partners.
Consumers enter into relationships only if there is some benefit to them.
Relationship marketing seeks to achieve customer satisfaction.
Better-informed consumers require a beneficial relationship when they make investments. They demand benefits from the companies that supply them.

15. Benefits of Relationship Marketing
Lower costs and higher profits for the business
Efficient targeting of best customers increases the lifetime value of a customer
Stronger relationships with business partners and opportunities to combine capabilities and resources to better accomplish goals
The lifetime value of customers is important as current customers make referrals and provide customer feedback. Increasing lifetime value will lead to higher profits.

16. Tools for Nurturing Customer Relationships
80/20 principle: frequent customers have a higher lifetime value, so businesses allocate resources accordingly
Frequency marketing: reward purchasers with cash, rebates, and other premiums (punch cards, points)
Affinity programs: solicit involvement based on common interest (sports logos)
The 80/20 rule denotes that some customers provide more value than others. But overall, these tools help firms strengthen the relationship they have with their customers.

17. Career Kickstart Read Calming the Angry Customer – page 327
One-on-one marketing allows companies to employ mass customization to meet customer needs. This strategy is another form of relationship marketing that depends on technology. Customer relationship management uses technology to efficiently manage one-on-one relationships.

18. Comarketing & Cobranding
Comarketing – businesses jointly market each other’s products
Cobranding – when multiple companies link their names to a single product
Example: Hershey’s and Betty Crocker – desserts/frostings – Reese’s, Almond Joy, Hershey’s Milk Chocolate Bars
One-on-one marketing allows companies to employ mass customization to meet customer needs. This strategy is another form of relationship marketing that depends on technology. Customer relationship management uses technology to efficiently manage one-on-one relationships.

19. Chapter 11 Assignment
Review Questions – page 330 #1, #5, #7, #11, #12 Type the questions and the answers.
Projects & Teamwork Applications – page 331 #3
One-on-one marketing allows companies to employ mass customization to meet customer needs. This strategy is another form of relationship marketing that depends on technology. Customer relationship management uses technology to efficiently manage one-on-one relationships.