Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 11 Building Customer Relationships Through Effective Marketing

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Learning Objectives ① Understand the meaning of marketing and the importance of management of customer relationships. ② Explain how marketing adds value by creating several forms of utility. ③ Trace the development of the marketing concept and understand how it is implemented. ④ Understand what markets are and how they are classified. ⑤ Understand the two major components of a marketing strategy—target market and marketing mix. 11 2

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Learning Objectives (cont’d) ⑥ Explain how the marketing environment affects strategic market planning. ⑦ Understand the major components of a marketing plan. ⑧ Describe how market measurement and sales forecasting are used. ⑨ Distinguish between a marketing information system and marketing research. ⑩ Identify the major steps in the consumer buying decision process and the sets of factors that may influence this process. 11 3

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Marketing 11 4 Creating, Communicating, Delivering, and Exchanging Offerings that have value for customers, clients, partners, and society at large

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Marketing Functions Exchanging BuyingSelling Distributing TransportingStoring Facilitating FinancingStandardizationRisk Taking Gathering Information 11 5

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Managing Customer Relationships Establishing long-term, mutually satisfying buyer-seller relationships Relationship marketing: Using information about customers to create marketing strategies that develop and sustain desirable customer relationships Customer relationship management (CRM): Measure of a customer’s worth (sales minus costs) to a business over one’s lifetime Customer lifetime value: 11 6

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Managing Customer Relationships 11 7 Who 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. © SUSAN VAN ETTEN

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 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 11 8

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Utility: The Value Added by Marketing 11 9 Putting products at the customer’s fingertips. Firms try to provide customers with products whenever and wherever they need them.

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Utility: The Value Added by Marketing Types of Utility

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Marketing Concept  Providing goods and services that satisfy customers’ needs  To achieve success, a business must: Communicate with potential customers to assess their needs Develop a good or service to satisfy those needs Continue to seek ways to provide customer satisfaction 11

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Marketing Concept Tell us what you really think. Surveys can be conducted in a variety of ways: in-person, by mail or fax, or online. Online surveys have made it very inexpensive for firms to gather customer feedback © ALAMY CREATIVITY / ALAMY

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Evolution of the Marketing Concept  Industrial revolution through the early twentieth century Business effort directed toward production to meet great demand Production orientation – Emphasis on increased output  1920s Production began to exceed demand Business efforts included selling goods than just producing them 11 13

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Evolution of the Marketing Concept Sales orientation - Increased advertising, enlarged sales forces, and occasionally, high-pressure selling techniques  1950s Business efforts focused on satisfying customers’ needs 11 14

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Implementing the Marketing Concept  Obtain information about present and potential customers Their needs Satisfaction of the needs Improving products Customer opinions about the firm © PIXSOOZ/SHUTTERSTOCK

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Implementing the Marketing Concept  Provide a product that will satisfy customers  Price the product at an acceptable and profitable level  Promote the product to potential customers  Ensure distribution for product availability when and where wanted  Obtain information on the effectiveness of the marketing effort and modify efforts as necessary 11 16

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Markets and Their Classification  Market: 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 © ED BOCKSTOCK/SHUTTERSTOCK

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Markets and Their Classification Business-to-business (industrial) markets - Purchase specific kinds of products for use in making other products for resale or for day-to-day operations Producer markets Reseller markets

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Markets and Their Classification -Governmental markets - Buy goods and services to maintain internal operations and to provide citizens with such products as highways, education, water, energy, and national defense -Institutional markets - Churches, not-for- profit private schools and hospitals, civic clubs, fraternities and sororities, charitable organizations, and foundations 11 19

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Developing Marketing Strategies  Marketing strategy: 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 (product, price, distribution, and promotion) 11 20

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Target Market Selection and Evaluation  Target market: 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 Women Teenagers College Students New Parents Men Baby Boomers

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Target Market Selection and Evaluation  Undifferentiated approach: Directing a single marketing mix at the entire market for a particular product Useful in only a limited number of situations © SUSAN VAN ETTEN

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Target Market Selection and Evaluation  Market segment: Group of individuals or organizations within a market that share one or more common characteristics © B.BBLES PHOTOLIBRARY / ALAMY

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Developing Marketing Strategies Reaching the right market segments. Some skin care products are aimed at women, while others, such as the LAB Series, are aimed at men. Very few brands of moisturizers that are aimed at both men and women. COURTESY OF THE ADVERTISING ARCHIVES

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Developing Marketing Strategies Two pens, two different concentrated targeting strategies. They do not compete for the same customers. COURTESY OF THE ADVERTISING ARCHIVES; ©J GROUP PHOTO

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Developing Marketing Strategies Source: William M. Pride and O. C. Ferrell, Marketing: Concepts and Strategies, 17 th ed. (Mason, OH;: South-Western/Cengage Learning 2014). Adapted with permission.

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Developing Marketing Strategies Source: William M. Pride and O. C. Ferrell, Marketing: Concepts and Strategies, 17 th ed. (Mason, OH;: South-Western/Cengage Learning 2014). Adapted with permission.

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Developing Marketing Strategies Source: William M. Pride and O. C. Ferrell, Marketing: Concepts and Strategies, 17 th ed. (Mason, OH;: South-Western/Cengage Learning 2014). Adapted with permission.

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Market Segmentation Demographics Psychographics GeographicBehavioristic 11 29

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Advertisers’ Classification of Audiences NameAgeNeedsInfluencer Millennials<25Tech Savvy Media saturated, ethnically diverse Gen Xers25-38Media Savvy More cynical than millennials, individualistic Boomers39-58 Avid Consumers Deny aging process Matures57+ Practical, pragmatic Money conscious Source: “Audience Research,” MediaKnowAll,

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CLASS EXERCISE  Identify one or several characteristics or variables that could be used to segment the markets for each of these products Recreational vehicles (RVs) Baby food Rolls Royce automobiles Snow tires Hotel rooms Magazines Soft drinks Movies Shoes Bicycles

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Marketing Mix 11 32

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Creating a Marketing Mix The maker of All Small & Mighty has developed a specific marketing mix for the detergent. Who do you think the product is aimed at? 11 33

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Marketing Strategy and the Marketing Environment  The marketing mix consists of elements that a firm controls and uses to reach its target market  Forces that make up the external marketing environment Economic forces Sociocultural forces Political forces Competitive forces Legal and regulatory forces Technological forces 11 34

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Developing a Marketing Plan Written document that specifies an organization’s resources, objectives, strategy, and implementation and control efforts to be used in marketing a specific product or product group

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Developing a Marketing Plan  Components of the Marketing Plan Executive summary Environmental analysis SWOT analysis Marketing objectives Marketing strategies Marketing implementation Evaluation and control 11 36

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Market Measurement and Sales Forecasting  Sales forecast: Estimate of the amount of a product that an organization expects to sell during a certain period of time based on a specified level of marketing effort Organizations use several forecasting methods -Executive judgments -Surveys of buyers or sales personnel -Time-series analyses -Correlation analyses -Market tests 11 37

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Marketing Information Systems  System for managing marketing information that is gathered continually from internal and external sources Internal data sources -Sales figures, product and marketing costs, inventory levels, and sales force activities External data sources -Suppliers, intermediaries, customers, competitors, and economic conditions Outputs -Sales reports, sales forecasts, buying trends, market share 11 38

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Marketing Information Systems Can you hear me now? Would you interested in having a pre- recruited group of your customers ready and willing to participate in your surveys at a moment’s notice? If so, you might want to sign up for online software such as PortalPanel, produced the marketing research company Toluna © TOLUNA

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Marketing Research Process of systematically gathering, recording, and analyzing data concerning a particular marketing problem

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Six Steps of Marketing Research Define the Problem Investigate Plan the Research Gather Information Interpret the Information Reach a Conclusion 11 41

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Using Technology to Gather and Analyze Marketing information  Database - Collection of information arranged for easy access and retrieval Databases such as LEXIS-NEXIS, Reader’s Digest  Single-source data - Information provided by a single firm  Online information services - Offer subscribers access to , websites, mailing lists  Internet - Useful in accessing Web pages such as Nielsen and Advertising Age 11 42

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Types of Buying Behavior  Decisions and actions of people involved in buying and using products  Consumer buying behavior: Purchasing of products for personal or household use, not for business purposes  Business buying behavior: Purchasing of products by producers, resellers, governmental units, and institutions 11 43

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Types of Buying Behavior 11 44

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Consumer Buying Behavior Recognizing a problem. Problem recognition is the first stage of the consumer buying decision process. This ad makes consumers aware of an environmental problem they might not have known they were contributing to.

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Consumer Buying Behavior  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 11 46

Copyright ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Business Buying Behavior  Business buyers consider a product’s quality, its price, and the service provided by suppliers  Business buyers are better informed than consumers about products and generally buy in larger quantities  In a business, a committee or a group of people, rather than just one person, decides on purchases 11 47