Part 5 Marketing: Developing Relationships © 2015 McGraw-Hill Education.

CHAPTER 11 Customer-Driven Marketing CHAPTER 12 Dimensions of Marketing Strategy CHAPTER 13 Digital Marketing and Social Networking 11-2

Learning Objectives LO 11-1Define marketing and describe the exchange process. LO 11-2Specify the functions of marketing. LO 11-3Explain the marketing concept and its implications for developing marketing strategies. LO 11-4Examine the development of a marketing strategy, including market segmentation and marketing mix. LO 11-5Investigate how marketers conduct marketing research and study buying behavior. LO 11-6Summarize the environmental forces that influence marketing decisions. 11-3

The Nature of Marketing 11-4 Marketing A group of activities designed to expedite transactions by creating, distributing, pricing, and promoting goods, services, and ideas Exchange The act of giving up one thing (money, credit, labor, goods) in return for something else (goods, services, or ideas)

11-5 Creating Value with Marketing Customer Benefits Customer Costs Customer Value = – Value A customer’s subjective assessment of benefits relative to costs in determining the worth of a product Marketing Concept The idea that an organization should try to satisfy customers’ needs through coordinated activities that also allow it to achieve its own goal

Evolution of the Marketing Concept 11-6 Market Orientation An approach requiring organizations to gather information about customer needs, share that information throughout the firm, and use that information to help build long-term relationships with customers  Began in the 1950s and continues today  New technologies are helping firms to improve communication and learn what customers want Marketing Strategy A plan of action for developing, pricing distributing, and promoting products that meet the needs of specific customers

Selecting a Target Market 11-7 Market A group of people who have a need, purchasing power, and the desire and authority to spend money on goods, services, and ideas Target Market A specific group of consumers on whose needs and wants a company focuses its marketing efforts Total-Market Approach An approach whereby a firm tries to appeal to everyone and assumes that all buyers have similar needs  Sellers of salt, sugar, and many agricultural products use a total-market approach because everyone is a potential consumer of these products

Selecting a Target Market 11-8  Women are the largest market segment, with 51% of the U.S. population  Marketers are focusing on the growing Hispanic population Market Segmentation A strategy whereby a firm divides the total market into groups of people who have relatively similar product needs Market Segment A collection of individuals, groups, or organizations who share one or more characteristics and thus have relatively similar product needs and desires

Market Segmentation Approaches 11-9 Concentration Approach A market segmentation approach whereby a company develops one marketing strategy for a single market segment Porsche directs all its marketing efforts toward high-income individuals who want to own high-performance vehicles Multisegment Approach A market segmentation approach whereby the marketer aims its efforts at two or more segments, developing a marketing strategy for each Raleigh bicycles has designed separate marketing strategies for racers, tourers, commuters, and children

Market Segmentation Approaches © Niche Marketing Is a narrow market segment focus when efforts are on one small, well- defined group that has a unique, specific set of needs Companies segment markets on the basis of several variables: DemographicGeographicPsychographicBehavioristic

Developing a Marketing Mix Marketing Mix The four marketing activities—product, price, promotion, and distribution— that the firm can control to achieve specific goals within a dynamic marketing environment A product whether a Good – A physical entity you can touch (a car, computer, or adopted kitten) Service – The application of human and mechanical efforts to people or objects to provide intangible benefits to customers (Air travel, dry cleaning, or haircuts) Idea – Can be a concept, philosophy, image, or issue (attorney advise or political parties) Is a complex mix of tangible and intangible attributes that provide satisfaction and benefits

Price, Distribution & Promotion Price A value placed on an object exchanged between a buyer and a seller Distribution Making products available to customers in the quantities desired Promotion A persuasive form of communication that attempts to expedite a marketing exchange by influencing individuals, groups, and organizations to accept goods, services, and ideas

Marketing Research and Information Systems Marketing Research A systematic, objective process of getting information about potential customers to guide marketing decisions Marketing information that is observed, recorded, or collected directly from respondents “Mystery shoppers”, surveys, and focus groups Passive observation of consumer behavior and open- ended questions techniques Primary Data Information that is compiled inside or outside an organization for some purpose other than changing the current situation Information compiled by the U.S. Census Bureau and other government agencies, databases created by marketing research firms, as well as sales and other internal reports Secondary Data

Buying Behavior Buying Behavior The decision processes and actions of people who purchase and use products Perception The process by which a person selects, organizes, and interprets information received from his or her senses Motivation Inner drive that directs a person’s behavior toward goals Learning Changes in a person’s behavior based on information and experience Attitude Knowledge and positive or negative feelings about something Personality The organization of an individual’s distinguishing character traits, attitudes, or habits

Social Variables of Buying Behavior Social Roles A set of expectations for individuals based on some position they occupy Reference Groups Groups with whom buyers identify and whose values or attitudes they adopt Social Classes A ranking of people into higher or lower positions of respect Culture The integrated, accepted pattern of human behavior, including thought, speech, beliefs, actions, and artifacts