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

2. 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. LEARNING GOALS Chapter Thirteen 13-2

3. 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 13-3

4. Profile In 2010, Jimenez became the first American CEO of Swiss-based Novartis. Jimenez sees Novartis as more than just a pharmaceutical company. To exemplify marketing at its best, social responsibility needs to be part of the Novartis mission. JOSEPH JIMENEZ Novartis 13-4

5. Where’s the beef? Many people don’t care about the answer to that question anymore. As the trend toward vegetarianism grows, this well- known company in Canada offers a vegan version of its chicken sandwich in 500 of its 750 stores. Name that company! NAME that COMPANY Chapter Thirteen 13-5

6. 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 13-6

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. FOCUS of CONTEMPORARY MARKETING LG1 What is Marketing? 13-7

8. Many theaters provide food with movies. LET’S GO to the MOVIES (Spotlight on Small Business) It may turn out that such theaters only appeal to a niche market and may not prove profitable. Do you have other suggestions for how to improve the movie- going experience? Photo Courtesy of: A.D. Wheeler 13-8

9. The Evolution of Marketing Production Era Selling Era Marketing Concept Era Customer Relationship Era FOUR ERAS of U.S. MARKETING LG1 13-9

10. 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 13-10

11. 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 13-11

12. 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 13-12

13. 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 13-13

14. 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 2010. 13-14

15. 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 LG1 13-15

16. 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 13-16

17. The clothing industry is developing software to help measure the environmental impact of their apparel. Would you look at a label to determine whether or not you would buy tennis shoes or a garment based on its eco-friendliness? HOW GREEN is GREEN? (Thinking Green) 13-17

18. The Marketing Mix The FOUR P’s LG2 13-18

19. Designing a Product to Meet Consumer Needs Product -- A good, service, or idea that satisfies a consumer’s want or need. DEVELOPING a 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. 13-19

20. 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 LG2 13-20

21. 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 13-21

22. 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 2010. Developing an Effective Promotional Strategy Be a likeable salesperson:  Have confidence.  Be intriguing.  Show interest in others.  Be enthusiastic and respectful. 13-22

23. 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 2011. Developing an Effective Promotional Strategy Photo Courtesy of: Cortes de Cima 13-23

24. Consumers have smartphones and digital tablets that can get them online anywhere. CALLING ALL BUSINESSES! (Social Media in Business) Devices lack of uniform design which is a challenge to web designers, making it costly. mShopper helps retailers break into the mobile market with the Mobile Commerce Platform, or mStore.mShopper 13-24

25. Progress Assessment 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? PROGRESS ASSESSMENT 13-25

26. 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. SEARCHING for INFORMATION LG3 13-26

27. 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 LG3 13-27

28. What’s the present situation? What are the alternatives? What information is needed? How should the information be gathered? DEFINING the PROBLEM or OPPORTUNITY LG3 The Marketing Research Process 13-28

29. 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 13-29

30. 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 13-30

31. Focus Group -- A group of people who meet under the direction of a discussion leader to communicate opinions. FOCUS GROUPS LG3 The Marketing Research Process 13-31

32. 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 13-32

33. 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 13-33

34. 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 13-34

35. 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 13-35

36. The MARKETING ENVIRONMENT LG4 The Marketing Environment 13-36

37. 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 13-37

38. 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. LG4 13-38

39. Progress Assessment What are the four steps in the marketing research process? What’s environmental scanning? What factors are included in environmental scanning? PROGRESS ASSESSMENT 13-39

40. 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 LG5 13-40

41. Segmenting the Consumer Market 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. (continued) SEGMENTING the CONSUMER MARKET LG5 13-41

42. 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 (continued) LG5 Segmenting the Consumer Market 13-42

43. 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. LG5 13-43

44. 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. MASS MARKETING vs. RELATIONSHIP MARKETING LG5 13-44

45. 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 KEYS to SUCCESSFUL RELATIONSHIP MARKETING LG5 Moving Toward Relationship Marketing 13-45

46. The Consumer Decision-Making Process 1. Problem recognition 2. Search for information 3. Evaluating alternatives 4. Purchase decision 5. Postpurchase evaluation STEPS in the CONSUMER DECISION-MAKING PROCESS LG5 13-46

47. The CONSUMER DECISION MAKING PROCESS AND OUTSIDE INFLUENCES LG5 The Consumer Decision-Making Process 13-47

48. Learning Reference Groups Culture Subcultures Cognitive Dissonance KEY FACTORS in CONSUMER DECISION-MAKING LG5 The Consumer Decision-Making Process Photo Courtesy of: Peter Hilton 13-48

49. 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. BUSINESS-to-BUSINESS MARKET (B2B) LG6 13-49

50. 1) There are relatively few customers. 2) Customers tend to be large buyers. 3) Markets are geographically concentrated. 4) Buyers are more rational than emotional. 5) Sales are direct. 6) Promotions focus heavily on personal selling. B2B MARKET DIFFERENCES LG6 The Business- to-Business Market 13-50

51. Progress Assessment Define the terms consumer market and business- to-business market. Name and describe five ways to segment the consumer market. What’s 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? PROGRESS ASSESSMENT 13-51