1. Building Customer Relationships Through Effective Marketing
Chapter 11
Building Customer Relationships Through Effective Marketing

2. Learning Objectives
Understand the meaning of marketing and the importance of management of customer relationships.
Explain how marketing adds value by creating several forms of utility.
Trace the development of the marketing concept and understand how it is implemented.
Understand what markets are and how they are classified.
Identify the four elements of the marketing mix and be aware of their importance in developing a marketing strategy.
Explain how the marketing environment affects strategic market planning.
Understand the major components of a marketing plan.
Describe how market measurement and sales forecasting are used.
Distinguish between a marketing information system and marketing research.
Identify the major steps in the consumer buying decision process and the sets of factors that may influence this process.

3. Marketing
…an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.

4. Table 11.1: Major Marketing Functions

5. Exchange Between Buyer and Seller
Source: William M. Pride and O. C. Ferrell, Marketing: Concepts and Strategies, 15th ed. (Mason, Ohio: South-Western/Cengage Learning, 2010). Adapted with permission.

6. Relationship Marketing
…establishing long-term, mutually satisfying buyer-seller relationships.
Successful marketers respond to customer needs and strive to continually increase value to buyers over time.

7. Customer Relationship Marketing
…using information about customers to create marketing strategies that develop and sustain desirable customer relationships.

8. Customer Lifetime Value
…a combination of purchase frequency, average value of purchases, and brand-switching patterns over the entire span of a customer’s relationships with a company.

9. …the ability of a good or service to satisfy a human need.
Utility
…the ability of a good or service to satisfy a human need.

10. Types of Utility
Form: converting production inputs into finished products
Place: making a product available at a location where customers wish to purchase it
Time: making a product available when customers wish to purchase it
Possession: transferring title (or ownership) of a product to a buyer

11. Figure 11.1: Types of Utility

12. Marketing Concept
…a business philosophy that a firm should provide goods and services that satisfy customers’ needs through a coordinated set of activities that allows the firm to achieve its objectives.

13. Table 11.2: Evolution of Customer Orientation

14. Evolution of the Marketing Concept
Marketing Orientation
Sales Orientation
Production Orientation
1850
1900
1950
2000
Source: Adapted from William M. Pride and O.C. Ferrell, Foundations of Marketing, 3rd ed., © 2009 by Houghton Mifflin Company. All rights reserved.

15. Implementing Marketing Concept
Obtain information
Determine needs
Determine how needs are currently satisfied
Learn how products might be improved
Find out opinions customers have of firm and marketing efforts
Use information to pinpoint specific needs and potential customers

16. Mobilize Marketing Resources
Provide product
Price product
Promote product
Distribute product
Obtain information

17. Market
…a 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.

18. Market Classifications
Business-to-Consumer (B2C)
Business-to-Business (B2B)

19. Business-to-Consumer Markets
…consist of purchasers and/or household members who intend to consume or benefit from the purchased products and who do not buy products to make profits.

20. Business-to-Business Markets
…are grouped broadly into producer, reseller, governmental, and institutional categories…. They purchase specific kinds of products for use in making other products, for resale, or for day-to-day operations.

21. B2B Markets
Producer : buys certain products to use in manufacture of other products
Reseller: buys finished products and sells them for profit
Governmental: buys goods and services to maintain internal operations and to provide products to citizens
Institutional: buys goods for goals unrelated to profit, market share, or return on investment

22. Marketing Strategy
…a plan that will enable an organization to make the best use of its resources and advantages to meet its objectives.

23. Using the Internet
The American Marketing Association’s website is an excellent resource for marketing information.

24. Parts of Marketing Strategy
Select/analyze target market
Create/maintain appropriate marketing mix

25. Marketing Mix
…a combination of product, price, distribution, and promotion developed to satisfy a particular target market.

26. Target Market
…a group of individuals or organizations, or both, for which a firm develops and maintains a marketing mix suitable for the specific needs and preferences of that group.

27. Marketing Managers
Examine potential markets for possible effect on firm’s sales, costs, and profits
Determine if organization has the resources to produce a marketing mix that meets the needs of a target market
Determine if satisfying those needs is consistent with firm’s objectives
Analyze competitors

28. Approaches of Selecting Target Market
Undifferentiated Company designs a single marketing mix and directs it at the entire market for a particular product
Market segmentation Company divides a market into segments and directs marketing mix at particular segment or segments rather than the total market

29. Market Segment
…a group of individuals or organizations within a market that shares one or more common characteristics.

30. Figure 11.2: Selecting Target Markets
The letters in each target market represent potential customers. Customers that have the same letters have similar characteristics and similar product needs.

31. Table 11.3: Common Bases of Market Segmentation
Source: William M. Pride and O. C. Ferrell, Marketing: Concepts and Strategies, 15th ed. (Mason, Ohio: South-Western/Cengage Learning, 2010). Adapted with permission.

32. Advertisers’ Classification of Audiences
Name
Age
(2003)
Needs
Influencer
Millennials
<25
Tech Savvy
Grew up in prosperous times
Gen X-ers
25–38
Media Savvy
Grew up in economic downturn
Boomers
39–58
Avid Consumers
Deny aging process
Matures
57+
Practical, pragmatic
Money conscious
MediaKnowAll, “Audience Research”,

33. Figure 11.3: The Marketing Mix and the Marketing Environment

34. Product Decisions
Design
Brand Name
Packaging
Warranties

35. Pricing Decisions Spotlight
Base Price
Discounts
Goals
Maximize profit
Make room for new models
Spotlight
Source: Bayer Consulting for Deloitte LLP survey of 1,006 people ages 17 to 28.

36. Distribution Decisions
Transportation
Storage
Selection of Intermediaries
Number of levels
Width of distribution 36

37. Promotion Decisions Advertising Personal Selling Sales Promotion
Public Relations 37

38. Controllable Elements of Mix Can Also Be Varied for...
Organizational goals
Marketing goals
Target markets 38

39. Forces of External Marketing Mix
Economic
Sociocultural
Political
Competitive
Legal & regulatory
Technological 39

40. Marketing Plan
…a 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. 40

41. Describes firm’s current position
Marketing Plan
Describes firm’s current position
Establishes marketing objectives for product
Specifies how the organization will attempt to achieve these objectives
Time frame
Short-range = 1 year or less
Medium-range = 1 to 5 years
Long-range = 5+ years 41

42. Marketing Plan Is Used for...
Communication among employees
Assignment of responsibilities/tasks
Schedules for implementation
How resources allocated
Monitor/evaluate performance 42

43. Table 11.4: Components of Marketing Plan
Source: William M. Pride and O. C. Ferrell, Marketing: Concepts and Strategies, 15th ed. (Mason, Ohio: South-Western/Cengage Learning, 2010). Reprinted with permission.. 43

44. Sales Forecast
…an 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. 44

45. Surveys of buyers/sales personnel Time-series analyses
Forecasting Methods
Executive judgments
Surveys of buyers/sales personnel
Time-series analyses
Correlation analyses
Market tests 45

46. Marketing Information System
…a system for managing marketing information that is gathered continually from internal and external sources. 46

47. Sources of Information
Internal
Sales figures
Product/marketing costs
Inventory levels
Activities of sales force
External
Organization’s suppliers
Intermediaries
Customers
Competitors’ activities
Economic conditions 47

48. Information Can Include
Daily sales reports
Forecasts of sales/buying trends
Reports on changes in market share 48

49. Marketing Research
…the process of systematically gathering, recording, and analyzing data concerning a particular marketing problem. 49

50. Table 11.5: The Six Steps of Market Research50

51. Technology and Marketing Information
Database
Single-Source Data
Online Information Services
Internet
Nielsen
Advertising Age
Intranet 51

52. Table 11.6: Internet Sources of Marketing Information
Source: William M. Pride and O. C. Ferrell, Marketing: Concepts and Strategies, 15th ed. (Mason, Ohio: South-Western/Cengage Learning, 2010). Reprinted with permission. 52

53. Buying Behavior
…the decisions and actions of people involved in buying and using products. 53

54. Consumer Buying Behavior
…the purchasing of products for personal or household use, not for business purposes. 54

55. Figure 11.4: Consumer Decision Process and Influences55

56. Business Buying Decision Process and Possible Influences on the Process
Source: William M. Pride and O. C. Ferrell, Marketing: Concepts and Strategies, 13th ed. Copyright © 2006 by Houghton Mifflin Company. Adapted with permission. 56

57. Personal Income
…the income an individual receives from all sources less the Social Security taxes the individual must pay.. 57

58. …personal income less all additional personal taxes.
Disposable Income
…personal income less all additional personal taxes. 58

59. Discretionary Income
…disposable income less savings and expenditures on food, clothing, and housing. 59

60. Business Buying Behavior
…the purchasing of products by producers, resellers, governmental units, and institutions. 60

61. Business Buyers Consider Usually Quality Price Service provided
Better informed
Buy in larger quantities 61

62. Business Buying Occurs Through...
Description
Inspection
Sampling
Negotiation 62

63. Chapter Quiz
The utility created by transferring title of a product to the buyer is called __________ utility.
form
time
production
place
possession 63

64. Chapter Quiz
J.C. Penney is considered to be a member of which type of market?
Business-to-business
Reseller
Consumer
Producer
Institutional 64

65. Chapter Quiz
The ingredient of the marketing mix concerned with product design, brand names, packaging, and warranties is
pricing.
quality.
product.
distribution.
promotion. 65

66. Chapter Quiz
All of the following are true of marketing plans except that they should
not be modified.
include details of task scheduling.
specify task objectives.
describe the firm’s current situation.
focus on a particular product or product group. 66

67. Chapter Quiz In this chapter, MIS refers to _________ system.
merged information
major information
marketing information
market influential
minor information 67