© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin DEVELOPING CUSTOMER RELATIONSHIPS AND VALUE THROUGH MARKETING 1 1 C HAPTER

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Define marketing and explain the importance of (1) discovering and (2) satisfying consumer needs and wants. Distinguish between marketing mix elements and environmental factors. AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO:

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Understand how organizations build strong customer relationships using current thinking about customer value and relationship marketing. Describe how today’s market orientation differs from prior eras oriented to production and selling. AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO:

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Understand the meaning of ethics and social responsibility and how they relate to the individual, organizations, and society. Know what is required for marketing to occur and how it creates customer value and utilities for customers. AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO:

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin FUSION, CORE, AND LIGHTNING! PHYSICS 101? The Three-Century Old Innovation Understanding the Consumer What a Difference a Decade Makes DEVELOPING CUSTOMER RELATIONSHIPS AND VALUE THROUGH MARKETING

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Rollerblade Skates, Marketing, and You DEVELOPING CUSTOMER RELATIONSHIPS AND VALUE THROUGH MARKETING

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Being a Marketing Expert: Good News-Bad News The Good News: You Already Have Marketing Experience The Bad News: Surprises About the Obvious WHAT IS MARKETING?

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Marketing: Using Exchanges to Satisfy NeedsMarketingExchanges The Diverse Factors Influencing Marketing Activities WHAT IS MARKETING?

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Requirements for Marketing to Occur Two or More Parties with Unsatisfied Needs Desire and Ability to Satisfy These Needs A Way for the Parties to Communicate Something to Exchange WHAT IS MARKETING?

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Concept Check 1. What is marketing? A: Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 2. Marketing focuses on __________ and ___________ consumer needs Concept Check discovering satisfying

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Concept Check 3. What four factors are needed for marketing to occur? A: (1) Two or more parties with unsatisfied needs, (2) A desire and ability on their part be satisfied, (3) A way for the parties to communicate, and (4) Something to exchange.

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Discovering Consumer Needs The Challenge of Launching Winning New Products Consumer Needs and Consumer Wants HOW MARKETING DISCOVERS AND SATISFIES CONSUMER NEEDS

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin What a Market IsMarket Satisfying Consumer Needs  Target market Target market The Four Ps: Controllable Marketing Mix Factors Marketing Mix The Uncontrollable, Environmental Factors Environmental Factors HOW MARKETING DISCOVERS AND SATISFIES CONSUMER NEEDS

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Global Competition, Customer Value, and Customer RelationshipsCustomer Value Relationship Marketing and the Marketing Program Relationship Marketing: Easy to UnderstandRelationship Marketing Relationship Marketing: Difficult to Implement The Marketing ProgramMarketing Program THE MARKETING PROGRAM: HOW CUSTOMER RELATIONSHIPS ARE BUILT

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin A Marketing Program for Rollerblade Expanding the Market for Rollerblade Skates Exploiting Strengths in Technology THE MARKETING PROGRAM: HOW CUSTOMER RELATIONSHIPS ARE BUILT

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Staying Ahead of the Trends THE MARKETING PROGRAM: HOW CUSTOMER RELATIONSHIPS ARE BUILT

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 1. An organization can’t satisfy the needs of all consumers, so it must focus on one or more subgroups, which are its ____________. target markets Concept Check

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Concept Check 2. What are the four marketing mix elements that make up the organization’s marketing program? A: product, price, promotion, place

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Concept Check 3. What are uncontrollable variables? A: Environmental factors the organization’s marketing department can’t control. These include social, economic, technological, competitive, and regulatory forces.

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Evolution of Market Orientation Production Era Sales Era The Marketing Concept EraMarketing Concept The Market Orientation EraMarket Orientation  Customer relationship management (CRM) Customer relationship management (CRM) HOW MARKETING BECAME SO IMPORTANT

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Ethics and Social Responsibility: Balancing the Interests of Different Groups Ethics Social Responsibility  Societal marketing concept Societal marketing concept  Macromarketing Macromarketing  Micromarketing Micromarketing HOW MARKETING BECAME SO IMPORTANT

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin The Breadth and Depth of Marketing Who Markets? What is Marketed? Who Buys and Uses What is Marketed?  Ultimate consumers Ultimate consumers  Organizational buyers Organizational buyers Who Benefits? How Do Consumers Benefit  Utility Utility HOW MARKETING BECAME SO IMPORTANT

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin 1. Like Pillsbury and General Electric, many firms have gone through four distinct orientations for their businesses: starting with the __________ era and ending with today’s ________________ era. Concept Check production market orientation

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Concept Check 2. What are the two key characteristics of the marketing concept? A: An organization should (1) Strive to satisfy the needs of consumers (2) While also trying to achieve the organization’s goals.

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Concept Check 3. In this book the term product refers to what three things? A: Goods (physical products), services, and ideas

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives. Marketing

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Exchange is the trade of things of value between buyer and seller so that each is better off after the trade. Exchange

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin A market is people with the desire and with the ability to buy a specific product. Market

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Environmental factors are the uncontrollable factors involving social, economic, technological, competitive, and regulatory forces. Environmental Factors

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin One or more specific groups of potential customers toward which an organization directs its marketing program. Target Market

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin The marketing mix is product, price, promotion, and place. Marketing Mix

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Customer value is the unique combination of benefits received by targeted buyers that includes quality, price, convenience, on-timer delivery and both before-sale and after-sale service. Customer Value

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin The hallmark of developing and maintaining effective customer relationships is today called relationship marketing, linking the organization to its individual customers, employees, suppliers, and other partners for their long term benefit. Relationship Marketing

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin The marketing program is a plan that integrates the marketing mix to provide a good, service, or idea to prospective buyers. Marketing Program

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin The marketing concept is the idea that an organization should strive to satisfy the needs of consumers, while also trying to achieve the organization’s goals. Marketing Concept

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin An organization that has a market orientation focuses its efforts on continuously collecting information about customers’ needs and competitors capabilities, sharing this information across departments, and using the information to create customer value. Market Orientation

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Customer relationship management is the process of identifying prospective buyers, understanding them intimately, and developing long-term perceptions of the organization and its offering so that buyers will choose them in the marketplace. Customer Relationship Management (CRM)

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin The societal marketing concept is the view that an organization should discover and satisfy the needs of its consumer in a way that also provides for society’s well- being. Societal Marketing Concept

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Macromarketing looks at how the aggregate flow of a nation’s goods and services benefits society. Macromarketing

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Micromarketing is how an individual organization directs its marketing activities and allocates its resources to benefit its customers. Micromarketing

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Ultimate consumers are the people who use the goods and services purchased for a household. Ultimate Consumer

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Organizational buyers are units such as manufacturers, retailers, or government agencies that buy goods and services for their own use of for resale. Organizational Buyers

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Utility is the benefit or customer value received by uses of a product. Utility