Building Customer Relationships Through Effective Marketing

Learning Objectives 11-1 Understand the meaning of marketing and the importance of management of customer relationships. 11-2 Explain how marketing adds value by creating several forms of utility. 11-3 Understand what markets are and how they are classified. 11-4 Understand market targeting 11-5 Understand mixed targeting

Learning Objectives (continued) 11-6 Explain how the marketing environment affects strategic market planning. 11-7 Understand the major components of a marketing plan. 11-8 Describe how market measurement and sales forecasting are used. 11-9 Identify the major steps in the consumer buying decision process and the sets of factors that may influence this process.

Marketing Marketing is the activity, set of institutions, and processes for… Creating Communicating Delivering Exchanging …offerings that have value for customers, clients, partners, and society at large

Eight Major Marketing Functions

Managing Customer Relationships Presentation must address… Why are customer relationships important? How do relationships affect sales? How do relationships affect the reputation of a company? Give an example of a company with good and bad customer relationships and explain. Additional Resources Websites helping with CRM http://www.zoho.com/crm/ Calculating customer lifetime value http://www.dbmarketing.com/articles/Art251a.htm

Managing Customer Relationships Relationship marketing Establishing long-term, mutually satisfying buyer-seller relationships Customer relationship management (CRM) Using information about customers to create marketing strategies that develop and sustain desirable customer relationships Customer lifetime value Measure of a customer’s worth (sales minus costs) to a business over one’s lifetime Additional Resources Websites helping with CRM http://www.zoho.com/crm/ Calculating customer lifetime value http://www.dbmarketing.com/articles/Art251a.htm

Customer Loyalty What do customers want? Sometimes it’s more profitable to retain customers by offering them big rewards than attracting new customers who may never develop the same loyalty.

Utility: The Value Added by Marketing Presentation must address 4 basic types of a good/service utility with examples What type of utility will our company hopefully offer? Choose one or two well known businesses and explain what types of utility they do or do not offer.

Utility: The Value Added by Marketing The ability of a good or service to satisfy a human need Kinds of utility: Form utility: Created by converting production inputs into finished products Place utility: Created by making a product available at a location where customers wish to purchase it Time utility: Created by making a product available when customers wish to purchase it Possession utility: Created by transferring title (ownership) of a product to a buyer

Types of Utility

Utility: Putting Products at Customer’s Fingertips Firms try to provide customers with products whenever and wherever they need them

Markets and Their Classification Your presentation must address…. The 4 main types of markets, with examples What type of market will our company hopefully serve? Choose one well known business and analyze the type of market they serve and give details. Additional Resources List of the largest consumer markets http://en.wikipedia.org/wiki/List_of_largest_consumer_markets

Markets and Their Classification Market: 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 Consumer markets: Purchasers and/or households members who intend to consume or benefit from the purchased products and who do not buy products to make a profit Additional Resources List of the largest consumer markets http://en.wikipedia.org/wiki/List_of_largest_consumer_markets

Types of Markets Business-to-business (industrial) markets: Purchase specific kinds of products for use in making other products for resale or for day-to-day operations Governmental markets: Buy goods and services to maintain internal operations and to provide citizens with such products as highways, education, water, energy, and national defense Institutional markets: Churches, not-for-profit private schools and hospitals, civic clubs, fraternities and sororities, charitable organizations, and foundations Additional Resources Institutional Banking http://www.commbank.com.au/about-us/careers/graduate-recruitment/business-units/institutional-banking-and-markets.html

Developing Marketing Strategies Marketing strategy: Plan that will enable an organization to make the best use of its resources and advantages to meet its objectives Consists of: The selection and analysis of a target market The creation and maintenance of an appropriate marketing mix (product, price, distribution, and promotion)

Target Market Selection and Evaluation Your presentation must address… What is the meaning of a target market? What is the difference between undifferentiated and differentiated market targeting, and why is the latter more effective? What are some common market differentiation types, and which will apply to our business?

Target Market Selection and Evaluation Women Teenagers College Students New Parents Men Baby Boomers Target market: Group of individuals, organizations, or both, for which a firm develops and maintains a marketing mix suitable for the specific needs and preferences of that group

Undifferentiated Approach Directing a single marketing mix at the entire market for a particular product Useful in only a limited number of situations

Market Segmentation Approach Group of individuals or organizations within a market that share one or more common characteristics Additional Resource Market segmentation related to sports http://www.sportengland.org/research/market_segmentation.aspx

Reaching the Right Market Segments The market for fragrances is segmented based on gender. Some fragrances are aimed at men, while others, such as the perfume featured in this Gucci advertisement, are aimed at women.

Differentiated Target Strategies Two types of vitamins, two different differentiated targeting strategies. Both Bayer Flintstones Gummies and Alive! Women’s multivitamins are using a differentiated targeting strategy to aim at a different, single market segment. Although both products are vitamins, they are not competing for the same customers. Additional Resource Example of creating a marketing plan http://www.mplans.com/telecomm_products_marketing_plan/marketing_strategy_fc.php COURTESY OF THE ADVERTISING ARCHIVES; ©J GROUP PHOTO

Differentiated Market Segmentation

Class Exercise Identify one or several characteristics or variables that could be used to segment the markets for each of these products. Recreational vehicles (RVs) Baby food Rolls Royce automobiles Snow tires Hotel rooms Magazines Soft drinks Movies Shoes Bicycles

Common Bases of Market Segmentation

Creating a Marketing Mix Your presentation must address…. What is a marketing mix? How does this related to market segmentation? Give a detailed example of how a well known business uses this strategy. What variables will our business try to emphasize to maximize sales, and why?

Creating a Marketing Mix A business firm controls four important elements of marketing that it combines in a way that reaches the firm’s target market Product Price Distribution Promotion

Marketing Mix

Developing the Right Marketing Mix Firms have little control over the marketing environment. However, they can control the marketing mixes for their products—that is, the nature of the products themselves and how they are priced, distributed, and promoted. Marketers at Coca-Cola have developed a specific marketing mix for Coca-Cola Classic.

Developing a Marketing Plan Your presentation must address What is a marketing plan and why do we need one? What are the six steps of market research? Develop a basic market research plan for class discussion that relates to our future business.

Developing a Marketing Plan A marketing plan is 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 Developing a clear, well-written marketing plan: Helps establish a unified vision for an organization Used for communication among employees Covers responsibilities, tasks, and scheduled Specifies how resources are allocated Helps marketing managers monitor and evaluate the performance of the marketing strategy

Developing a Marketing Plan A marketing plan is 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 Developing a clear, well-written marketing plan: Helps establish a unified vision for an organization Used for communication among employees Covers responsibilities, tasks, and scheduled Specifies how resources are allocated Helps marketing managers monitor and evaluate the performance of the marketing strategy

Components of the Marketing Plan

Marketing Research Process of systematically gathering, recording, and analyzing data concerning a particular marketing problem Six steps of marketing research Define the problem Make a preliminary investigation Plan the research Gather factual information Interpret the information Reach a conclusion The American Marketing Association’s website is an excellent resource for marketing information. http://www.marketingpower.com

Six Steps of Marketing Research

Market Measurement and Sales Forecasting Your presentation must include…. What is sales forecasting? Find examples of sales forecasting in the real world and explain. What types of sales forecasting will be appropriate for our business and why? Additional Resource Sales forecast for a restaurant http://planasyougo.com/example-initial-sales-forecast-for-a-restaurant/

Market Measurement and Sales Forecasting Sales forecast: 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 Organizations use several forecasting methods Executive judgments Surveys of buyers or sales personnel Time-series analyses Correlation analyses Market tests Additional Resource Sales forecast for a restaurant http://planasyougo.com/example-initial-sales-forecast-for-a-restaurant/

Types of Buying Behavior Your presentation must include… What is buying behavior? Give examples. What is purchasing power? Give examples. Find real world examples of both and explain. Try to predict the buying behavior and purchasing power for our market here at the school and explain. Additional Behavior Stages of buying process http://www.formulis.com/blog/las-vegas-marketing/consumer-buying-behavior-understanding-five-stages-of-the-buying-process

Types of Buying Behavior Buying behavior: Decisions and actions of people involved in buying and using products Consumer buying behavior: Purchasing of products for personal or household use, not for business purposes Business buying behavior: Purchasing of products by producers, resellers, governmental units, and institutions Additional Behavior Stages of buying process http://www.formulis.com/blog/las-vegas-marketing/consumer-buying-behavior-understanding-five-stages-of-the-buying-process

Consumer Buying Behavior Consumers’ buying behaviors differ for different types of products

Consumer Buying Power Personal income: The income an individual receives from all sources less the Social Security taxes the individual must pay Disposable income: Personal income less all additional personal taxes Discretionary income Disposable income less savings and expenditures on food, clothing, and housing Of particular interest to marketers due to choice of how to spend it