Marketing: Helping Buyers Buy Chapter 13 Marketing: Helping Buyers Buy McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

LEARNING GOALS Chapter Thirteen Define Marketing and apply the marketing concept to both for-profit and nonprofit organizations. Describe the Four P’s of marketing. Summarize the Marketing Research process. 13-2

LEARNING GOALS Chapter Thirteen Show how marketers use Environmental Scanning to learn about the changing marketing environment. Explain how marketers apply the tools of Market Segmentation, relationship marketing and the study of consumer behavior. Compare the Business-to-Bsiness market and the consumer market. 13-3

WHAT is MARKETING? What is Marketing? LG1 Marketing -- The activity, set of institutions and processes for creating, communicating, delivering, and exchanging offerings with value for customers, clients, partners, and society at large. See Learning Goal 1: Define marketing and apply the marketing concept to both for-profit and non-profit organizations. Simply put, marketing is activities buyers and sellers perform to facilitate mutually beneficial exchanges. 13-4

FOCUS of CONTEMPORARY MARKETING What is Marketing? LG1 Marketing today involves helping the buyer buy through: Websites that help buyers find the best price, identify product features, and question sellers. Blogs and social networking sites that cultivate consumer relationships. See Learning Goal 1: Define marketing and apply the marketing concept to both for-profit and non-profit organizations. 13-5

The EVOLUTION of BUSINESS (Ch. 1) The Evolution of U.S. Business LG8 Agriculture Era Manufacturing Era Service Era Information-Based Era See Learning Goal 8: Review how past trends are being repeated in the present and what they mean for tomorrow’s college graduate. This slide along with the next four gives students a sense of perspective into the evolution of the United States economy. 1-6

FOUR ERAS of U.S. MARKETING The Evolution of Marketing LG1 Production Era Selling Era Marketing Concept Era Customer Relationship Era See Learning Goal 1: Define marketing and apply the marketing concept to both for-profit and non-profit organizations. In the United States, marketing has evolved through four eras: (1) production, (2) selling, (3) marketing concept, and (4) customer relationship. 13-7

The PRODUCTION and SELLING ERAS The Evolution of Marketing LG1 The general philosophy was “Produce what you can because the market is limitless.” After mass production, the focus turned from production to persuasion. See Learning Goal 1: Define marketing and apply the marketing concept to both for-profit and non-profit organizations. 13-8

The MARKETING CONCEPT ERA The Evolution of Marketing LG1 After WWII, a consumer spending boom developed. Businesses knew they needed to be responsive to consumers if they wanted their business. See Learning Goal 1: Define marketing and apply the marketing concept to both for-profit and non-profit organizations. 13-9

APPLYING the MARKETING CONCEPT The Evolution of Marketing LG1 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. See Learning Goal 1: Define marketing and apply the marketing concept to both for-profit and non-profit organizations. 13-10

The CUSTOMER RELATIONSHIP ERA The Evolution of Marketing LG1 Customer Relationship Management (CRM) -- Learning as much as you can about customers and doing what you can to satisfy or exceed their expectations. Organizations seek to enhance customer satisfaction building long-term relationships. Today firms like Priceline and Travelocity use CRM that allow customers to build a relationship with the suppliers. See Learning Goal 1: Define marketing and apply the marketing concept to both for-profit and non-profit organizations. 13-11

SERVICE with a SMILE Six Steps for Keeping Your Customers Happy The Evolution of Marketing LG1 The cost of acquiring a new customer is 5x the cost of retaining one. Here’s how to keep them: Build trust Emphasize the long term Listen Treat your customers like stars Show appreciation Remember employees are customers too! See Learning Goal 1: Define marketing and apply the marketing concept to both for-profit and non-profit organizations. Service with a Smile It’s important for companies to keep hold of their customer base. It’s too costly to keep searching out new customers. Ask students: What has a company done to keep you coming back? What has a company done to you that ensures you’ll never leave? Source: Inc. Guidebook, Vol. 2 No. 5 and Entrepreneur, February 2010. 13-12

NONPROFIT MARKETING Nonprofit marketing strategies include: Nonprofit Organizations and Marketing NONPROFIT MARKETING LG1 Nonprofit marketing strategies include: Determine the firm’s goals and objectives Focus on long-term marketing Find a competent board of directors Exercise strategic planning Train and develop long-term volunteers Carefully segment the target market See Learning Goal 1: Define marketing and apply the marketing concept to both for-profit and non-profit organizations. Marketing Strategies in Non-Profit Organizations This slide identifies many ideas for developing a successful marketing strategy for non-profit organizations. Regardless of the type or size of the organization, nonprofits will need marketing strategies and techniques to maximize their effectiveness. Marketing tactics nonprofits may consider as a part of an overall marketing program include the following: newspaper inserts, cross promotions, packaging promotions, and corporate newsletters. Public relations will play an important role with recognition and support for building strong community goodwill. Based on the following statistics, nonprofit organizations are very successful: During the past 10 years the number of reporting “public charities” grew by 6.3 percent annually. The nonprofit sector includes more than 1 million organizations that spend nearly $500 billion each year – more than the GDP of Brazil, Russia or Australia. Approximately 6 percent of all organizations in the United States are nonprofits, and one in every 15 people works for a nonprofit. 13-13

The FOUR P’s The Marketing Mix LG2 See Learning Goal 2: Describe the four P’s of marketing. The Four P’s are also known as the marketing mix. 13-14

DEVELOPING a PRODUCT Designing a Product to Meet Consumer Needs LG2 Product -- A good, service or idea that satisfies a consumer’s want or need. 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. See Learning Goal 2: Describe the four P’s of marketing. 13-15

PRICING and PLACING a PRODUCT Setting an Appropriate Price PRICING and PLACING a PRODUCT LG2 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. See Learning Goal 2: Describe the four P’s of marketing. 13-16

Photo Courtesy of: Uri Baruchin PROMOTING the PRODUCT Developing an Effective Promotional Strategy LG2 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 See Learning Goal 2: Describe the four P’s of marketing. Photo Courtesy of: Uri Baruchin 13-17

TANGLED WEB of PROMOTION Seven Sins of Web Design Developing an Effective Promotional Strategy TANGLED WEB of PROMOTION Seven Sins of Web Design LG1 Too much clutter Too difficult to navigate Stale information Copycatting Ignoring the needs of your customer base Not analyzing data Refusing to get outside help See Learning Goal 2: Describe the four P’s of marketing. Tangled Web of Promotion Companies often create web sites because they believe they have to. However, if it’s not done right, it could cause you to lose customers. Not enough emphasis is put on checking the analytics. As noted in this chapter, market research is extremely important. The same goes for web research. Ask students: Can you think of other things to add to this list? What are some companies that have good web sites? Bad web sites? Photo Courtesy of: Cortes de Cima Source: Entrepreneur, January 2011. 13-18

CALLING ALL BUSINESSES! (Social Media in Business) Consumers have smartphones and digital tablets that can get them online anywhere. Devices lack of uniform design which is a challenge to web designers, making it costly. mShopper helps retailers break into the mobile market with the Mobile Commerce Platform, or mStore. See Learning Goal 2: Describe the four P’s of marketing. Some retailers are hoping to use social media to enter the mobile market. Although many companies use social media to create awareness, there is a trend now of setting up direct outlets on social platforms. J.C. Penney and Delta Airlines have been in talks for months about obtaining a direct presence on Facebook. 13-19

SEARCHING for INFORMATION Providing Marketers with Information LG3 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. See Learning Goal 3: Summarize the marketing research process. To understand customer wants and needs, it is critical to conduct market research. Good market research will identify products consumers have used, want to use in the future and market trends. 13-20

FOUR STEPS in the MARKETING RESEARCH PROCESS LG3 Defining the problem or opportunity and determining the present situation. Collecting research data. Analyzing the data. Choosing the best solution and implementing it. See Learning Goal 3: Summarize the marketing research process. 13-21

DEFINING the PROBLEM or OPPORTUNITY The Marketing Research Process DEFINING the PROBLEM or OPPORTUNITY LG3 What is the present situation? What are the alternatives? What information is needed? How should the information be gathered? See Learning Goal 3: Summarize the marketing research process. 13-22

COLLECTING SECONDARY RESEARCH DATA The Marketing Research Process COLLECTING SECONDARY RESEARCH DATA LG3 Secondary Data -- Existing data that has previously been collected by sources like the government. Secondary data incurs no expense and is usually easily accessible. Secondary data doesn’t always provide all the needed information for marketers. See Learning Goal 3: Summarize the marketing research process. Secondary research is cheaper and often easier to gather than primary research, but may be outdated. 13-23

COLLECTING PRIMARY RESEARCH DATA The Marketing Research Process COLLECTING PRIMARY RESEARCH DATA LG3 Primary Data -- In-depth information gathered by marketers from their own research. Telephone, online and mail surveys, personal interviews, and focus groups are ways to collect primary data. See Learning Goal 3: Summarize the marketing research process. Primary data is timely, but can be expensive and time consuming to gather. 13-24

FOCUS GROUPS The Marketing Research Process LG3 Focus Group -- A group of people who meet under the direction of a discussion leader to communicate opinions. See Learning Goal 3: Summarize the marketing research process. 13-25

ANALYZING the DATA and IMPLEMENTING the DECISION The Marketing Research Process ANALYZING the DATA and IMPLEMENTING the DECISION LG3 Marketers must turn data into useful information. Must use their analysis to plan strategies and make recommendations. Finally, marketers must evaluate their actions and determine if further research is needed. See Learning Goal 3: Summarize the marketing research process. 13-26

KEY BENEFITS of MARKETING RESEARCH The Marketing Research Process KEY BENEFITS of MARKETING RESEARCH LG3 Analyze customer needs and satisfaction. Analyze current markets and opportunities. Analyze the effectiveness of marketing strategies. Analyze marketing process and tactics currently used. Analyze the reasons for goal achievement or failure. See Learning Goal 3: Summarize the marketing research process. Key Benefits of Marketing Research This slide identifies the key benefits of marketing research. As discussed early in the chapter, marketing is about understanding customers wants and needs. To accomplish this goal marketers must conduct marketing research. Ask students: How has the Internet changed the way market research is conducted? (The Internet has made gathering both primary and secondary information easier and quicker. Also, information can now be gathered via blogs and social networks. 13-27

MARKET RESEARCH vs. MARKETING RESEARCH The Marketing Research Process MARKET RESEARCH vs. MARKETING RESEARCH LG3 Market Research: Global information Marketing Research: In depth information on your customers and your products Products Goods Services Ideas See Learning Goal 3: Summarize the marketing research process. Key Benefits of Marketing Research This slide identifies the key benefits of marketing research. As discussed early in the chapter, marketing is about understanding customers wants and needs. To accomplish this goal marketers must conduct marketing research. Ask students: How has the Internet changed the way market research is conducted? (The Internet has made gathering both primary and secondary information easier and quicker. Also, information can now be gathered via blogs and social networks. http://marketing-planet.com/surveys/market-research-versus-marketing-research.html 13-28

WAYS to FIND OUT WHAT CONSUMERS THINK The Marketing Research Process WAYS to FIND OUT WHAT CONSUMERS THINK LG3 Conduct informal consumer surveys Host a customer focus group Listen to competitor’s customers Survey your sales force Become a “phantom” customer See Learning Goal 3: Summarize the marketing research process. Ways to Find Out What Consumers Think The goal of market research is to better understand what consumers are thinking. This slide addresses some of the ways that organizations can discover consumer wants and needs. 13-29

SCANNING the MARKETING ENVIRONMENT LG4 Environmental Scanning -- The process of identifying factors that affect marketing success. Factors involved in the environmental scan include: Global factors Technological factors Sociocultural factors Competitive factors Economic factors See Learning Goal 4: Show how marketers use environmental scanning to learn about the changing marketing environment. Environmental scanning is the process of identifying factors that affect marketing success. The environment of marketing is changing faster than at any time in history. Companies that don’t keep up, will fail to survive. Today’s marketing environment is influenced by the global marketplace and the explosion of the information age. To be fully prepared, a company must recognize and understand: cultural influences; governmental and political influences; demographic and lifestyle trends; local, national, and world economic trends; the strengths of multi-national competitors; and the influence of technology on physical distribution. 13-30

The MARKETING ENVIRONMENT LG4 See Learning Goal 4: Show how marketers use environmental scanning to learn about the changing marketing environment. To effectively understand the marketing environment, it is critical companies continually scan the environment. 13-31

The ABC’s of MARKETING Always be customer-focused. The Marketing Environment LG4 Always be customer-focused. Benchmark against the best firms. Continuously improve performance. Develop the best value package. Empower your employees. Focus on relationship building. Goal achievement is the reward. See Learning Goal 4: Show how marketers use environmental scanning to learn about the changing marketing environment. The ABC’s of Marketing This slide identifies keys to marketing success. One point on this slide mentions the empowerment of employees. Ask students: Why is empowering employees a key to successful marketing? (Answers will vary, but should focus on how empowerment should lead to greater employee motivation, creating a more customer focused environment.) A key to marketing is understanding the organization’s strengths and weaknesses and your ultimate customer. 4. Once you have identified your strengths and weaknesses, what you really sell and to whom, and have reviewed your communication to the target market, you need to ensure that the message resonates with them positively. You can do that by engaging in savvy public relations (newsletters, press releases, etc.). 13-32

The CONSUMER and B2B MARKET Two Different Markets: Consumer and B2B The CONSUMER and B2B MARKET LG4 Consumer Market -- All the individuals or households that want goods and services for personal use and have the resources to buy them. Business-to-Business (B2B) -- Individuals and organizations that buy goods and services to use in production or to sell, rent, or supply to others. See Learning Goal 4: Show how marketers use environmental scanning to learn about the changing marketing environment. The buyer’s intended end use of the product determines whether a product is consumer or B2B. 13-33

MARKETING to CONSUMERS The Consumer Market LG5 The size and diversity of the consumer market forces marketers to decide which groups they want to serve. Market Segmentation -- Divides the total market into groups with similar characteristics. Target Marketing -- Selecting which segments an organization can serve profitably. See Learning Goal 5: Explain how marketers apply the tools of market segmentation, relationship marketing, and the study of consumer behavior. 13-34

SEGMENTING the CONSUMER MARKET LG5 Geographic Segmentation -- Dividing the market by cities, counties, states, or regions. Demographic Segmentation -- Dividing the market by age, income, education, and other demographic variables. Psychographic Segmentation -- Dividing the market by group values, attitudes, and interests. (continued) See Learning Goal 5: Explain how marketers apply the tools of market segmentation, relationship marketing, and the study of consumer behavior. 13-35

SEGMENTING the CONSUMER MARKET (continued) LG5 Benefit Segmentation -- Dividing the market according to product benefits the customer prefers. Volume (Usage) Segmentation -- Dividing the market by the volume of product use. See Learning Goal 5: Explain how marketers apply the tools of market segmentation, relationship marketing, and the study of consumer behavior. 13-36

MARKETING to SMALL SEGMENTS Reaching Smaller Market Segments MARKETING to SMALL SEGMENTS LG5 Niche Marketing -- Identifies small but profitable market segments and designs or finds products for them. One-to-One Marketing-- Developing a unique mix of goods and services for each individual consumer. See Learning Goal 5: Explain how marketers apply the tools of market segmentation, relationship marketing, and the study of consumer behavior. 13-37

MASS MARKETING vs. RELATIONSHIP MARKETING Moving Toward Relationship Marketing MASS MARKETING vs. RELATIONSHIP MARKETING LG5 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. See Learning Goal 5: Explain how marketers apply the tools of market segmentation, relationship marketing, and the study of consumer behavior. Mass marketing uses little market segmentation. The goal of relationship marketing is to keep customers happy by offering products that meet exact expectations 13-38

DECISION MAKING Decision Making: Finding the Best Alternative LG3 Decision Making: Choosing among two or more alternatives. 7 STEPS-- Define the situation Describe and collect needed information Develop alternatives Develop agreement among those involved Decide which alternative is best Do what is indicated Determine if the decision was good and follow up See Learning Goal 3: Relate the planning process and decision making to the accomplishment of company goals. Managers don’t always go through this seven step process. However, they must always make sound decisions. It is easier said than done. As an interesting exercise, you can ask the students, working in a group, to go through a simple process of identifying an automobile to purchase using these steps. Everyone’s input should be obtained in the group. They either can select a group manager or all can have an equal say/vote. Both scenarios should produce different, but interesting experiences for students. 7-39

STEPS in the CONSUMER DECISION-MAKING PROCESS LG5 Problem recognition Search for information Evaluating alternatives Purchase decision Postpurchase evaluation See Learning Goal 5: Explain how marketers apply the tools of market segmentation, relationship marketing, and the study of consumer behavior. 13-40

The CONSUMER DECISION MAKING PROCESS AND OUTSIDE INFLUENCES LG5 See Learning Goal 5: Explain how marketers apply the tools of market segmentation, relationship marketing, and the study of consumer behavior. 13-41

KEY FACTORS in CONSUMER DECISION-MAKING The Consumer Decision-Making Process LG5 Learning Reference Groups Culture Subcultures Cognitive Dissonance See Learning Goal 5: Explain how marketers apply the tools of market segmentation, relationship marketing, and the study of consumer behavior. Learning - Creates changes in consumer behavior through experiences and information. Reference groups - Reference points in forming beliefs, attitudes, values or behaviors. Culture - The set of values, attitudes and ways of doing things passed from generations. Subculture - Values, attitudes and ways of doing things from belonging to a certain group. Cognitive dissonance - Psychological conflict that may occur after a purchase. Photo Courtesy of: Peter Hilton 13-42

BUSINESS-to-BUSINESS MARKET (B2B) The Business-to-Business Market BUSINESS-to-BUSINESS MARKET (B2B) LG6 B2B marketers include: Manufacturers Wholesalers and retailers Hospitals, schools and charities Government Products are often sold and resold several times before reaching final consumers. See Learning Goal 6: Compare the business-to-business market and the consumer market. 13-43

B2B MARKET DIFFERENCES There are relatively few customers. The Business-to-Business Market LG6 There are relatively few customers. Customers tend to be large buyers. Markets are geographically concentrated. Buyers are more rational than emotional. Sales are direct. Promotions focus heavily on personal selling. See Learning Goal 6: Compare the business-to-business market and the consumer market. 13-44

IN CONCLUSION What are the Four P’s of the Marketing Mix? Progress Assessment What are the Four P’s of the Marketing Mix? What is environmental scanning? What factors are included in environmental scanning? Define the terms consumer market and business- to-business market. Name and describe five ways to segment the consumer market. The consumer market consists of all the individuals or households that want goods and services for personal consumption or use and have the resources to buy them. Business-to-business markets consist of all the individual and organizations that want goods and services to use in producing other goods and services or to sell, rent, or supply goods to others. Geographic segmentation is the process of dividing the market by cities, counties, states, or regions. Demographic segmentation involves dividing the market by age, income, education level, religion, race, and occupation. Psychographic segmentation is the process of dividing the market by values, attitudes, and interests. Benefit segmentation involves determining which benefits to promote. Volume or usage segmentation is the process of determining how your customers purchase and use the product. 3. Niche marketing is identifying small but profitable market segments and designing or finding products for them. One-to-one marketing means developing a unique mix of goods and service for each individual customer. The four key factors that make B2B markets different from consumer markets are: (1) Customers in B2B markets are relatively few as compared to households in the consumer market, (2) B2B customers tend to be geographically centered, (3) B2B sales tend to be direct, and (4) In the B2B marketplace sales are based on personal selling. 13-45