Copyright © 2015 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Marketing: Helping Buyers Buy CHAPTER 13

LEARNING OBJECTIVES Define marketing, and apply the marketing concept to both for-profit and nonprofit organizations. 2. Describe the four P’s of marketing. 3. Summarize the marketing research process.

LEARNING OBJECTIVES Show how marketers use environmental scanning to learn about the changing marketing environment. 5. Explain how marketers apply the tools of market segmentation, relationship marketing and the study of consumer behavior. 6. Compare the business-to-business market and the consumer market.

DAYMOND JOHN FUBU 13-4 Started sewing wool hats in his apartment in 1989 and sold them on the street. He started designing other products and created the brand FUBU. FUBU After many rocky years, John has earned millions and advises others on Shark Tank.Shark Tank

NAME that COMPANY 13-5 This company studies population growth and regional trends as it expands its product line for specific regions of the country. Its research led to the creation of Creole flavors targeted primarily in the South and spicy nacho chees flavors mad especially for Texas and California. Name that company!

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. WHAT’S MARKETING? 13-6 LO 13-1

FOCUS of CONTEMPORARY MARKETING 13-7 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. LO 13-1

FOUR ERAS of U.S. MARKETING 13-8 Production Era Selling Era Marketing Concept Era Customer Relationship Era LO 13-1

The PRODUCTION and SELLING ERAS 13-9 The general philosophy was “Produce what you can because the market is limitless.” After mass production, the focus turned from production to persuasion. LO 13-1

After WWII, a consumer spending boom developed. Businesses knew they needed to be responsive to consumers if they wanted their business. The MARKETING CONCEPT ERA LO 13-1

APPLYING the MARKETING CONCEPT LO 13-1 The Marketing Concept includes three parts: 1. Customer Orientation -- Finding out what customers want and then providing it. 2. Service Orientation -- Making sure everyone in an organization is committed to customer satisfaction. 3. Profit Orientation -- Focusing on the goods and services that will earn the most profit.

The CUSTOMER RELATIONSHIP ERA LO 13-1 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.PricelineTravelocity

The EMERGING MOBILE MARKETING ERA LO 13-1 As digital technology continues to grow, consumer demands are expected to rise in: 1. Now: Consumers want to interact anywhere, anytime. 2. Can I?: They want to use information in new ways that create value for them. 3. For me: Consumers expect personalized experiences. 4. Simply: Consumers want all interactions to be easy.

The cost of acquiring a new customer is 5x the cost of retaining one. Here’s how to keep them: SERVICE with a SMILE Six Steps for Keeping Your Customers Happy Source: Inc. Guidebook, Vol. 2 No. 5. LO Build trust 2. Emphasize the long term 3. Listen 4. Treat your customers like stars 5. Show appreciation 6. Remember employees are customers too!

MAKING SUSTAINABILITY JUST PEACHY Campbell Soup is one of the 100 Most Sustainable Corporations in the World. They work with local farmers in New Jersey to use peaches unfit for purchase. Campbell’s manufactures peach salsa at no cost and donates proceeds to the Food Bank of South Jersey.

Nonprofit marketing tactics include: NONPROFIT MARKETING LO 13-1  Fundraising  Public Relations  Special Campaigns  Ecological practices  Changing public opinions and attitudes  Increasing organizational membership

MARKETING STRATEGIES for NONPROFITS LO 13-1 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

The FOUR P’s LO 13-2

Product -- A good, service, or idea that satisfies a consumer’s want or need. DEVELOPING a PRODUCT LO 13-2 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.

PRICING and PLACING a PRODUCT LO 13-2 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.

PROMOTING the PRODUCT Photo Courtesy of: Uri Baruchin LO 13-2 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

Get customers emotional about your product:  Make your product “built to love.”  Use emotion-laden advertising. PERFECT PROMOTION How to Get Customers to Need Your Product Sources: Entrepreneur, accessed November LO 13-2 Be a likeable salesperson:  Have confidence.  Be intriguing.  Show interest in others.  Be enthusiastic and respectful.

TANGLED WEB of PROMOTION Seven Sins of Web Design Source: Entrepreneur, accessed November Photo Creditf: Cortes de Cima LO 13-2 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

TEST PREP What does it mean to “help the buyer buy?” What are the three parts of the marketing concept? What are the Four P’s of the Marketing Mix?

SEARCHING for INFORMATION LO 13-3 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.

FOUR STEPS in the MARKETING RESEARCH PROCESS LO Defining the problem or opportunity and determining the present situation. 2. Collecting research data. 3. Analyzing the data. 4. Choosing the best solution and implementing it.

DEFINING the PROBLEM or OPPORTUNITY LO 13-3 What’s the present situation? What are the alternatives? What information is needed? How should the information be gathered?

Secondary Data -- Existing data that has previously been collected by sources like the government. COLLECTING SECONDARY RESEARCH DATA LO 13-3 Secondary data incurs no expense and is usually easily accessible. Secondary data doesn’t always provide all the needed information for marketers.

COLLECTING PRIMARY RESEARCH DATA LO 13-3 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.

Focus Group -- A group of people who meet under the direction of a discussion leader to communicate opinions. FOCUS GROUPS LO 13-3

ANALYZING the DATA and IMPLEMENTING the DECISION LO 13-3 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.

KEY BENEFITS of MARKETING RESEARCH LO 13-3 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.

Conduct informal consumer surveys WAYS to FIND OUT WHAT CONSUMERS THINK LO 13-3 Host a customer focus group Listen to competitor’s customers Survey your sales force Become a “phantom” customer

Environmental Scanning -- The process of identifying factors that affect marketing success. SCANNING the MARKETING ENVIRONMENT LO 13-4 Factors involved in the environmental scan include:  Global factors  Technological factors  Sociocultural factors  Competitive factors  Economic factors

TWO is BETTER THAN ONE China is setting aside its strict one- child policy and allowing two children if one of the spouses is an only child. Legos are far more expensive in China and part of that is due to distribution costs. By building a factory near Shanghai, Lego hopes to take advantage of the potential market growth and lessen the price for families.

The MARKETING ENVIRONMENT LO 13-4

The ABC’s of MARKETING LO 13-4 A lways be customer-focused. B enchmark against the best firms. C ontinuously improve performance. D evelop the best value package. E mpower your employees. F ocus on relationship building. G oal achievement is the reward.

Consumer Market -- All the individuals or households that want goods and services for personal use and have the resources to buy them. The CONSUMER and B2B MARKET LO 13-4 Business-to-Business (B2B) -- Individuals and organizations that buy goods and services to use in production or to sell, rent, or supply to others.

TEST PREP What are the four steps in the marketing research process? What’s environmental scanning? What factors are included in environmental scanning?

MARKETING to CONSUMERS LO 13-5 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.

SEGMENTING the CONSUMER MARKET LO 13-5 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.

SEGMENTING the CONSUMER MARKET LO 13-5 Benefit Segmentation -- Dividing the market according to product benefits the customer prefers. Volume (Usage) Segmentation -- Dividing the market by the volume of product use.

SEGMENTING the CONSUMER MARKET LO 13-5

SEGMENTING the CONSUMER MARKET LO 13-5

Niche Marketing -- Identifies small but profitable market segments and designs or finds products for them. MARKETING to SMALL SEGMENTS LO 13-5 One-to-One Marketing-- Developing a unique mix of goods and services for each individual consumer.

MASS MARKETING vs. RELATIONSHIP MARKETING LO 13-5 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.

KEYS to SUCCESSFUL RELATIONSHIP MARKETING LO 13-5 Effective relationship marketing is built on:  Open communication  Consistently reliable service  Staying in contact with customers  Trust, honesty, and ethical behavior  Showing that you truly care

STEPS in the CONSUMER DECISION-MAKING PROCESS LO Problem recognition 2. Search for information 3. Evaluating alternatives 4. Purchase decision 5. Postpurchase evaluation

TURNING NEGATIVES to POSITIVE Online product reviews have changed the consumer decision-making process. But the reviews are not always valid because they could be written about the experience instead of the product. Amazon hopes to correct this issue and has started a program in which the site’s most trusted reviewers are sent products to write about.

KEY FACTORS in CONSUMER DECISION-MAKING Photo Credit: Peter Hilton LO 13-5 Learning Reference Groups Culture Subcultures Cognitive Dissonance

TOP MARKETING CHALLENGES LO 13-5 Marketing can be challenging in both the B2C and B2B markets. Common issues are:  Brand awareness  Social media  Converting leads into customers  Budgeting  Increasing profit Source: Entrepreneur, accessed November

BUSINESS-to-BUSINESS MARKET (B2B) LO 13-6 B2B marketers include:  Manufacturers  Wholesalers and retailers  Hospitals, schools and charities  Government Products are often sold and resold several times before reaching final consumers.

B2B MARKET DIFFERENCES LO 13-6

TEST PREP Define the terms consumer market and business- to-business market. Name and describe five ways to segment the consumer market. What is niche marketing and how does it differ from one-to-one marketing? What are four key factors that make B2B markets different from consumer markets?