Chapter 12 Building Customer Relationships Through Effective Marketing

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 2 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.”

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 3 Utility “…the ability of a good or service to satisfy a human need.”

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 4 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 ©2007 Plush Studios/Bill Reitzel

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 5 Figure 12.1: Types of Utility

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 6 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.”

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 7 Implementing Marketing Concept  Obtain information  Determine needs  How needs currently satisfied  How products might be improved  What opinions customers have of firm and marketing efforts  Use information to pinpoint specific needs and potential customers ©2007 Microsoft PowerPoint

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 8 Mobilize Marketing Resources  Provide product  Price product  Promote product  Distribute product  Obtain information

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 9 Customer Relationship Marketing “…using information about customers to create marketing strategies that develop and sustain desirable customer relationships.” It’s all about the customer….

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 10 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.”

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 11 Market Classifications oConsumer oBusiness-to-Business (B2B) oBased on characteristics ©2007 Microsoft PowerPoint

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 12 Consumer Markets “…consist of purchasers and/or households members who intend to consume or benefit from the purchased products and who do not buy products to make profits.”

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 13 Business-to-Business Markets “…are grouped broadly into producer, reseller, governmental, and institutional categories….purchase specific kinds of products for use in making other products for resale or for day-to-day operations”

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 14 B2B Markets Producer- buys certain products to use in manufacture of other products Reseller- intermediaries that buy finished products and sell them for profit Governmental- government entities buy goods and services to maintain internal operations and to provide products to citizens Institutional- organizations whose goals do not relate to profit, market share, or return on investment

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 15 Marketing Strategy “…a plan that will enable an organization to make the best use of its resources and advantages to meet it objectives.”

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 16 Parts of Marketing Strategy  Selection/analysis of target market target market  Create/maintain appropriate marketing mix marketing mix ©2007 Getty Images/Stockbyte

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 17 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.”

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 18 Marketing mix “…combination of product, price, distribution, and promotion developed to satisfy a particular target market “

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 19 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- process of dividing a market into segments and directing marketing mix at particular segment or segments rather than the total market ©2007 Getty Images/Stockbyte

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 20 Market Segment “…a group of individuals or organizations within a market that shares one or more common characteristics.” World’s Most Expensive Dessert

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 21 © 2009 South-Western, a division of Cengage Learning 21 CONSUMER MARKET SEGMENTATION Demographic Geographic Psychographic Behavioral

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 22 Table 12.3: Bases of Market Segmentation Source: William M. Pride and O. C. Ferrell, Marketing: Concepts and Strategies (Boston: Houghton Miffl in, 2006). Copyright © 2006 by Houghton Miffl in Company. Adapted with permission.

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 23 How are the markets being segmented? © 2009 South-Western, a division of Cengage Learning 23

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 24 Giant 3 gallon size beans Single serving © 2009 South-Western, a division of Cengage Learning 24

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 25 © 2009 South-Western, a division of Cengage Learning 25

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 26 Product Decisions  Design  Brand Name  Packaging  Warranties ©2007 Digital Vision/Flying Colours Ltd

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 27 Pricing Decisions $ Base Price $ Discounts $ Goals  Maximize profit  Make room for new models

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 28 Distribution Decisions  Transportation  Storage  Selection of Intermediaries

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 29 Promotion Decisions Advertising Personal Selling Sales Promotion Public Relations ©2007 Digital Vision/Flying Colours Ltd

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 30 © 2009 South-Western, a division of Cengage Learning 30 THE ENVIRONMENT IS CONSTANTLY CHANGING When low carbohydrate diets swept through American culture, retail sales of french fries plummeted, dropping 2.9% in 2001, 3.3% in 2002, and 10% in 2003.

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 31 Figure 12.3: Marketing Mix and the Marketing Environment

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 32 Although Wal-Mart Supercenters have generated great customer satisfaction, they have also prompted questions about their impact on communities. These issues relate to urban sprawl, the viability of local mom and pop stores, the destruction of historic sites, the ability of local tax dollars to support infrastructure to handle increased traffic, and the impact on local culture. Some communities have successfully fought to keep their hometowns Wal-Mart free. On the other hand, one new Wal-Mart Supercenter can create 450 jobs and generate millions of dollars in local taxes. What impact are these supercenters likely to have on competitive forces, economic forces, political forces, legal and regulatory forces, and sociocultural forces?

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 33 Forces of External Marketing Mix  Economic  Sociocultural  Political  Competitive  Legal and regulatory  Technological

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 34 Buying Behavior “…the decisions and actions of people involved in buying and using products.”

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 35 Consumer Buying Behavior “…the purchasing of products for personal or household use, not for business purposes.”

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 36 Figure 12.4: Consumer Buying Process and Influences

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 37 Business Buying Behavior “…the purchasing of products by producers, resellers, governmental units, and institutions.”

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 38 Business Buyers  Consider  Quality  Price  Service provided  Usually  Better informed  Buy in larger quantities  Using a different time frame ©2007 Photodisc/Ryan McVay

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 39 Business Buying Occurs Through  Description  Inspection  Sampling  Negotiation

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 40 Marketing Information System “…a system for managing marketing information that is gathered continually from internal and external sources.”

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 41 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

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 42 Marketing Research “…the process of systematically gathering, recording, and analyzing data concerning a particular marketing problem.”

Copyright © Houghton Mifflin Company. All rights reserved. 12 | 43 Table 12.5: Six Steps of Market Research