Building Customer Relationships Through Effective Marketing

What is Marketing? According to the American Marketing Association… Marketing is the activity, set of institutions, and processes for… Creating Communicating Delivering Exchanging …offerings that have value for customers, clients, partners, and society at large

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 Product Pricing Promotion Place Ideas Services Goods 2 Important Functions Facilitate Exchanges (Encourage Purchase) Satisfy Customer Needs

Eight Major Marketing Functions

Managing Customer Relationships Relationship marketing Establishing long-term, mutually satisfying buyer-seller relationships Customer relationship management (CRM) Using information about customers to create marketing strategies that develop and sustain desirable customer relationships Customer lifetime value Measure of a customer’s worth (sales minus costs) to a business over one’s lifetime

Customer Loyalty What do customers want? Sometimes it’s more profitable to retain customers by offering them big rewards than attracting new customers who may never develop the same loyalty.

Understanding Today’s Customers 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.

The Marketing Concept 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: Customer Orientation -- Finding out what customers want and then providing it. Service Orientation -- Making sure everyone in an organization is committed to customer satisfaction. Profit Orientation -- Focusing on the goods and services that will earn the most profit.

Utility: The Value Added by Marketing The ability of a good or service to satisfy a human need Kinds of utility: 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 a buyer

Types of Utility

Markets and Their Classification 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 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

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)

Target Market Selection and Evaluation 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

A Well-Chosen Market 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

Undifferentiated Approach Directing a single marketing mix at the entire market for a particular product Useful in only a limited number of situations

Market Segmentation Approach Group of individuals or organizations within a market that share one or more common characteristics

Differentiated Market Segmentation

Common Bases of Market Segmentation

Segmenting the Market

Marketing Mix

The Marketing Mix: The 4 P’s Product Product differentiation Brand Product Decisions about product’s design, purpose, brand name, packaging, and warranties Price Cover costs Competitively priced Price Decisions based on price setting (what to charge for product) including rebates, and discounts Promotion Inform and persuade customers to buy Build positive customer relationships Promotion Decisions that sellers use to persuade and communicate to people to buy their products / services Place Distribution channel Distributors and wholesalers Place (Distribution) Decisions based on moving products from producers to consumers (marketing channels)

Marketing Strategy and the Marketing Environment The Marketing Mix (4 P’s): The marketing mix consists of elements that a firm controls and uses to reach its target market The Marketing Environment: Forces that make up the external and outside the firm’s control include: Economic forces Sociocultural forces Political forces Competitive forces Legal and regulatory forces Technological forces

Marketing Information Systems 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

Marketing Research Process of systematically gathering, recording, and analyzing data concerning a particular marketing problem Six steps of marketing research Define the problem Make a preliminary investigation Plan the research Gather factual information Interpret the information Reach a conclusion

Using Technology to Gather and Analyze Marketing information Database: Collection of information arranged for easy access and retrieval, such as: LEXIS-NEXIS Reader’s Digest Single-source data: Information provided by a single firm Online information services: Offer subscribers access to e-mail, websites, mailing lists Internet: Useful in accessing Web pages such as Nielsen and Advertising Age

Consumer Buying Behavior Consumers’ buying behaviors differ for different types of products

Consumer Buying Power 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 Of particular interest to marketers due to choice of how to spend it