© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 11 | Slide 1 Marketing Chapter11

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 11 | Slide 2  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: a combination of purchase frequency, average value of purchases, and brand- switching patterns over the entire span of a customer’s relationship with a company Marketing is About Managing Customer Relationships

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 11 | Slide 3 The 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

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 11 | Slide 4 The Marketing Concept (cont.)  How did the marketing concept come about? Industrial revolution through the early twentieth century – Business effort directed toward production to meet great demand 1920s – Production began to exceed demand – Business efforts included selling goods by advertising and hiring larger sales forces 1950s – Business efforts also focused on satisfying customers’ needs

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 11 | Slide 5 Evolution of the Marketing Concept (cont.) Marketing Orientation Sales Orientation Production Orientation Source: Adapted from William M. Pride and O.C. Ferrell, Foundations of Marketing, 3 rd ed., © 2009 by Houghton Mifflin Company. All rights reserved.

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 11 | Slide 6  The ability of a good or service to satisfy a human need 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 (or ownership) of a product to a buyer Utility

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 11 | Slide 7 Types of Utility

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 11 | Slide 8  Amazon.com excels at providing “place” utility Amazon Fulfillment Center Amazon offers same day delivery? If it’s same day delivery, or next-day, doesn’t that also provide “time” utility? Amazon.com An example of excellent distribution (“Place Utility”)

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 11 | Slide 9  Putting the marketing concept into practice-  The 4 P’s of the Marketing Mix: – Provide a PRODUCT that will satisfy customers – PRICE the product at an acceptable and profitable level – PROMOTE the product to potential customers – Ensure distribution (PLACE) for product availability when and where wanted  Modify the 4 P’s as needed to satisfy the customer The 4 P’s of the Marketing Mix

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 11 | Slide 10 Markets and Their Classification  Market A group of individuals or organizations, or both, that need products in a given category and who are ready, willing and able (have the authority) to buy.  Consumer markets Purchasers and/or household members who intend to consume or benefit from the purchased products and who do not buy products to resell them.  Business-to-business (industrial) markets Producer, reseller, governmental, and institutional customers that purchase specific kinds of products for use in making other products for resale or for day-to-day operations

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 11 | Slide 11 Business-to-business Markets  Producer markets Individuals and business organizations that buy products to use in the manufacture of other products  Reseller markets Intermediaries such as wholesalers and retailers that buy finished products and sell them for a profit  Governmental markets Buy goods and services to maintain operations and provide citizens with products such as highways, education, utilities, defense  Institutional markets Churches, not-for-profit private schools and hospitals, civic clubs, charitable organizations

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 11 | Slide 12 Developing Marketing Strategies  Marketing strategy……a strategy is like a map. It shows how will you get from point A to point B. A plan that will enable an organization to make the best use of its resources and advantages to meet its objectives Consists of: 1. Selecting the target market. 2. Creating the 4 P’s of the marketing mix to satisfy the target market.

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 11 | Slide 13  Target market selection and evaluation Target market – A 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 Market segment – A group of individuals or organizations within a market that share one or more common characteristics Market segmentation – The process of dividing a market into segments and directing a marketing mix at a particular segment or segments rather than at the total market Developing Marketing Strategies (cont.)

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 11 | Slide 14 Common Bases of Market Segmentation

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 11 | Slide 15 Advertisers’ Classification of Audiences NameAgeNeedsInfluencer Millennials<30Tech Savvy Media saturated, ethnically diverse Gen Xers30-45Media Savvy More cynical than millennials Boomers45-64 Avid Consumers Deny aging process Matures65+ Practical, pragmatic Money conscious Source: “Audience Research,” MediaKnowAll, Accessed 10/10/11.

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 11 | Slide 16 The Marketing Mix and the Marketing Environment

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 11 | Slide 17 Developing a 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  Elements of a marketing plan Executive summary Environmental analysis Strengths and weaknesses Opportunities and threats Marketing objectives Marketing strategies Marketing implementation Evaluation and control

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 11 | Slide 18 Components of the Marketing Plan

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 11 | Slide 19 Sales Forecasting  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

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 11 | Slide 20 Marketing Information  Marketing information system A system for managing marketing information that is gathered continually from internal and external sources  Internal data sources Sales figures, product and marketing costs, inventory, sales force activities  External data sources Suppliers, intermediaries, customers, competitors, economic conditions  Outputs Sales reports, sales forecasts, buying trends, market share

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 11 | Slide 21 The Six Steps of Marketing Research

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 11 | Slide 22 Using the Internet  The American Marketing Association’s website is an excellent resource for marketing information.

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 11 | Slide 23  The decisions and actions of people involved in buying and using products  Consumer buying behavior The purchasing of products for personal or household use, not for business purposes  Business buying behavior The purchasing of products by producers, resellers, governmental units, and institutions Types of Buying Behavior

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 11 | Slide 24 Consumer Buying Decision Process and Possible Influences on the Process

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 11 | Slide 25 Why Do Consumers Buy?  They have a use for the product.  They like the convenience a product offers.  They believe the purchase will enhance their wealth.  They take pride in ownership.  They buy for safety.

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 11 | Slide 26  Influences on where to buy Perception of the store General impressions of an establishment’s products, prices, and sales personnel Types of retail outlets – Specialty store, department store, discount store Location Product assortment Services such as credit terms, return privileges, free delivery Where Do Consumers Buy?

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 11 | Slide 27  When buying is most convenient  Brick and mortar businesses-Hours have stretched to include evenings, holidays, and Sundays  Online shopping- 24/7 from anywhere there is an internet connection When Do Consumers Buy?

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 11 | Slide 28 Chapter Quiz 1. The utility created by transferring title of a product to the buyer is called __________ utility. A. form B. time C. production D. place E. possession

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 11 | Slide 29 Chapter Quiz 2. J.C. Penney is considered to be a member of which type of market? A. Business-to-business B. Reseller C. Consumer D. Producer E. Institutional

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 11 | Slide 30 Chapter Quiz 3. The ingredient of the marketing mix concerned with product design, brand names, packaging, and warranties is A. pricing. B. quality. C. product. D. distribution. E. promotion.

© 2013 South-Western, a part of Cengage Learning. All rights reserved. Chapter 11 | Slide 31 Chapter Quiz 4. All of the following are true of marketing plans except that A. They should not be modified. B. They should include task scheduling. C. They should specify task objectives. D. They should describe the firm’s current situation. E. They should focus on a particular product or product group.