Building Customer Relationships Through Effective Marketing Pride I Hughes I Kapoor 13 Chapter Building Customer Relationships Through Effective Marketing PowerPoint Presentation by Charlie Cook Seventh Edition Copyright © by Houghton Mifflin Company. All rights reserved.

The American Consumer Consumer income Why do consumers buy? Personal income—the income that a person 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. 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. Copyright © by Houghton Mifflin Company. All rights reserved.

Consumer Buying Behavior Consumer Buying Decision Process and Possible Influences Recognize problem Search for information Evaluate alternatives Purchase CONSUMER BUYING DECISION PROCESS POSSIBLE INFLUENCES ON THE DECISION PROCESS after purchase Psychological influences Perception Motives Learning Attitudes Personality Lifestyles Situational influences Physical surroundings Social surroundings Time Purchase reason Buyer’s mood and condition Social influences Family Roles Peer groups Social class Culture and subcultures • A buyer goes through some or all of these steps when making a purchase. Source: William M. Pride and O. C. Ferrell, Marketing: Concepts and Strategies, 2000/ed. Copyright © 2000 by Houghton Mifflin Company, Adapted with permission. Figure 13.4 Copyright © by Houghton Mifflin Company. All rights reserved.

What Do Consumers Buy? Consumer spending Figure 13.5 Housing (includes furnishings and utilities) Transportation Miscellaneous Personal insurance and pensions Food at home 18.6% 33.0% 10.4% Health care 5.7% Apparel and services Food away from home Entertainment 5.4% 4.9% 4.7% 7.8% 9.5% What percentage of disposable income is spent on various categories of products and services? Source: Bureau of Labor Statistics, Office of Pricing and Living Conditions, ftp://ftp.bls.gov/pub/specialrequests, March 2000. Figure 13.5 Copyright © by Houghton Mifflin Company. All rights reserved.

The Marketing Concept Evolution of customer orientation Table 13.2 Copyright © by Houghton Mifflin Company. All rights reserved.

The Marketing Concept Evolution of the marketing concept Marketing concept—a business philosophy that involves the entire organization in the process of satisfying customers’ needs while achieving the organization’s goals. Relationship marketing—developing mutually beneficial long-term partnerships with customers to enhance customer satisfaction and to stimulate long-term customer loyalty. Copyright © by Houghton Mifflin Company. All rights reserved.

Implementing the Marketing Concept Implementation steps Obtain information about present and potential customers, their needs, and how well those needs are being satisfied. Pinpoint specific needs and potential customers toward which to direct marketing activities and resources. Mobilize marketing resources to: Provide a product that will satisfy customers. Price the product at acceptable and profitable levels. Promote the product to potential customers. Ensure distribution for product availability when and where wanted. Obtain information on the effectiveness of the marketing effort and modify efforts as necessary. Copyright © by Houghton Mifflin Company. All rights reserved.

Markets and Their Classification A group of individuals or organizations, or both, that need products in a given category and have the ability, willingness, and authority to purchase such products. Classification of markets Consumer markets Purchasers and/or households members who intend to consume or benefit from the purchased products and who do not buy the products to make a profit. Business-to-business (industrial markets) Producer, reseller, governmental, and institutional markets that purchase specific kinds of products for use in the making of other products, for resale, or for day-to-day operations. Copyright © by Houghton Mifflin Company. All rights reserved.

Developing Marketing Strategies Marketing strategy A plan that will enable an organization to make the best use of its resources and advantages to meet its objectives through: The selection and analysis of a target market. The creation and maintenance of an appropriate marketing mix, a combination of product, price, distribution, and promotion developed to satisfy a particular target market. Copyright © by Houghton Mifflin Company. All rights reserved.

Developing Marketing Strategies (cont’d) Target market selection and evaluation Target market—a group of individuals, organizations, or both for which the 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 shares 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. Copyright © by Houghton Mifflin Company. All rights reserved.

Market Measurement and Sales Forecasting 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. Evaluating the feasibility of a new market Identify the relevant time frame covered by the forecast. Define the geographic boundaries of the forecast. Indicate for which products the forecasts are relevant. Copyright © by Houghton Mifflin Company. All rights reserved.

Approaches for Selecting Target Markets Undifferentiated Approach Directing a single marketing mix at the entire market for a particular product. Organization Single marketing mix Target market NOTE: The letters in each target market represent potential customers. Customers that have the same letters have similar characteristics and similar product needs. Distribution Price Promotion Product A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A Source: William M. Pride and O. C. Ferrell, Marketing: Concepts and Strategies, 2000/ed. Copyright © 2000 by Houghton Mifflin Company, Adapted with permission. Figure 13.2a Copyright © by Houghton Mifflin Company. All rights reserved.

Approaches for Selecting Target Markets (cont’d) Concentrated Market Segmentation Approach A single marketing mix is directed at a single market segment. Single marketing mix Organization Target market NOTE: The letters in each target market represent potential customers. Customers that have the same letters have similar characteristics and similar product needs. Distribution Price Promotion Product A A A A A A A A A A A A A A A A A A A A A A A A B B B B B B B B C C C C C C C C C C C C C C C C C C C C C C C C Source: William M. Pride and O. C. Ferrell, Marketing: Concepts and Strategies, 2000/ed. Copyright © 2000 by Houghton Mifflin Company, Adapted with permission. Figure 13.2b Copyright © by Houghton Mifflin Company. All rights reserved.

Approaches for Selecting Target Markets (cont’d) Marketing mix I Marketing mix II Organization Target markets Distribution Price Promotion Product A A A A A A A A A A A A A A A A A A A A A A A A B B B B B B B B C C C C C C C C C C C C C C C C C C C C C C C C Differentiated Market Segmentation Approach – Multiple marketing mixes focused on multiple market segments. NOTE: The letters in each target market represent potential customers. Customers that have the same letters have similar characteristics and similar product needs. Source: William M. Pride and O. C. Ferrell, Marketing: Concepts and Strategies, 2000/ed. Copyright © 2000 by Houghton Mifflin Company, Adapted with permission. Figure 13.2c Copyright © by Houghton Mifflin Company. All rights reserved.

Creating a Marketing Mix The Marketing Mix and the Marketing Environment The marketing mix consists of elements that the firm controls—product, price, distribution, and promotion. The firm generally has no control over forces in the marketing environment. Price Distribution Product Economic forces Technological Competitive Marketing mix Marketing environment Political Socio- cultural Legal and regulatory Promotion Customer Source: William M. Pride and O. C. Ferrell, Marketing: Concepts and Strategies, 2000/ed. Copyright © 2000 by Houghton Mifflin Company, Adapted with permission. Figure 13.3 Copyright © by Houghton Mifflin Company. All rights reserved.