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

1. 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. 4. 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. LEARNING GOALS Chapter Thirteen 13-2

What is Marketing? 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? LG1 13-3

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. FOCUS of CONTEMPORARY MARKETING LG1 What is Marketing? 13-4

The Evolution of Marketing Production Era Selling Era Marketing Concept Era Customer Relationship Era FOUR ERAS of U.S. MARKETING LG1 13-5

The general philosophy was “Produce what you can because the market is limitless.” After mass production, the focus turned from production to persuasion. The PRODUCTION and SELLING ERAS LG1 The Evolution of Marketing 13-6

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 LG1 The Evolution of Marketing 13-7

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. APPLYING the MARKETING CONCEPT LG1 The Evolution of Marketing 13-8

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 CUSTOMER RELATIONSHIP ERA LG1 The Evolution of Marketing 13-9

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 1. Build trust 2. Emphasize the long term 3. Listen 4. Treat your customers like stars 5. Show appreciation 6. Remember employees are customers too! LG1 The Evolution of Marketing Source: Inc. Guidebook, Vol. 2 No. 5 and Entrepreneur, February

Nonprofit marketing tactics include: NONPROFIT MARKETING Nonprofit Organizations and Marketing  Fundraising  Public Relations  Special Campaigns  Ecological practices  Changing public opinions and attitudes  Increasing organizational membership LG

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 MARKETING STRATEGIES for NONPROFITS LG1 Nonprofit Organizations and Marketing 13-12

Designing a Product to Meet Consumer Needs Product -- A good, service, or idea that satisfies a consumer’s want or need. The FOUR P’s: Product LG2 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

Setting an Appropriate Price 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. PRICING and PLACING a PRODUCT LG

Developing an Effective Promotional Strategy 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 PROMOTING the PRODUCT LG2 Photo Courtesy of: Uri Baruchin 13-15

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 LG1 Sources: Entrepreneur, February 2011 and Entrepreneur, March Developing an Effective Promotional Strategy Be a likeable salesperson:  Have confidence.  Be intriguing.  Show interest in others.  Be enthusiastic and respectful

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 TANGLED WEB of PROMOTION Seven Sins of Web Design LG1 Source: Entrepreneur, January Developing an Effective Promotional Strategy Photo Courtesy of: Cortes de Cima 13-17

Providing Marketers with Information 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. MARKET RESEARCH:SEARCHING for INFORMATION LG

The Marketing Research Process 1. 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. FOUR STEPS in the MARKETING RESEARCH PROCESS LG

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. COLLECTING PRIMARY RESEARCH DATA LG3 The Marketing Research Process 13-20

Secondary Data -- Existing data that has previously been collected by sources like the government. COLLECTING SECONDARY RESEARCH DATA Secondary data incurs no expense and is usually easily accessible. Secondary data doesn’t always provide all the needed information for marketers. LG3 The Marketing Research Process 13-21

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. ANALYZING the DATA and IMPLEMENTING the DECISION LG3 The Marketing Research Process 13-22

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. KEY BENEFITS of MARKETING RESEARCH LG3 The Marketing Research Process 13-23

Conduct informal consumer surveys WAYS to FIND OUT WHAT CONSUMERS THINK Host a customer focus group Listen to competitor’s customers Survey your sales force Become a “phantom” customer LG3 The Marketing Research Process 13-24

The Marketing Environment Environmental Scanning -- The process of identifying factors that affect marketing success. SCANNING the MARKETING ENVIRONMENT LG4 Factors involved in the environmental scan include:  Global factors  Technological factors  Sociocultural factors  Competitive factors  Economic factors 13-25

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. The ABC’s of MARKETING LG4 The Marketing Environment 13-26

Two Different Markets: Consumer and B2B 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 Business-to-Business (B2B) -- Individuals and organizations that buy goods and services to use in production or to sell, rent, or supply to others. LG

The Consumer Market 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. MARKETING to CONSUMERS LG

Segmenting the Consumer Market Geographic Segmentation -- Dividing the market by cities, counties, states, or regions. Demographic Segmentation -- Dividing the market by age, income, education (demographic variables). Psychographic Segmentation -- Dividing the market by group values, attitudes, and interests. 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 LG

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

Moving Toward Relationship Marketing 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. Building Effective Relationships:  Open communication; Consistently reliable service  Staying in contact with customers  Trust, honesty, and ethical behavior  MASS MARKETING vs. RELATIONSHIP MARKETING LG

The CONSUMER DECISION MAKING PROCESS AND OUTSIDE INFLUENCES LG5 The Consumer Decision-Making Process 13-32

Learning Reference Groups Culture Subcultures Cognitive Dissonance KEY FACTORS in CONSUMER DECISION-MAKING LG5 The Consumer Decision-Making Process Photo Courtesy of: Peter Hilton 13-33

The Business- to-Business Market B2B marketers include:  Manufacturers  Wholesalers and retailers  Hospitals, schools and charities  Government Products are often sold and resold several times before reaching final consumers. Fewer customers; larger purchases Buyers are geographically located; selling is direct BUSINESS-to-BUSINESS MARKET (B2B) LG