1. Chapter Thirteen Building Customer Relationships Through Effective Marketing

2. Copyright © Houghton Mifflin Company. All rights reserved.13 - 2 Marketing The process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives

3. Major marketing functions Exchange functions –Buying –Selling Physical distribution functions –Transportation –Storing Facilitating functions –Financing –Standardizing and Grading –Risk taking –Gathering information Copyright © Houghton Mifflin Company. All rights reserved.13 - 3

4. Copyright © Houghton Mifflin Company. All rights reserved.13 - 4 Types of Utility

5. Copyright © Houghton Mifflin Company. All rights reserved.13 - 5 The Marketing Concept To achieve success, a business must: –Talk to its potential customers to assess their needs –Develop a good or service to satisfy those needs –Continue to seek ways to provide customer satisfaction Relationship marketing –Developing mutually beneficial long-term partnerships with customers to enhance customer satisfaction and to stimulate long-term customer loyalty

6. Copyright © Houghton Mifflin Company. All rights reserved.13 - 6 How is a customer’s needs satisfied?

7. Copyright © Houghton Mifflin Company. All rights reserved.13 - 7 Markets and Their Classification 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 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 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

8. Copyright © Houghton Mifflin Company. All rights reserved.13 - 8 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 –Consists of 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)

9. Copyright © Houghton Mifflin Company. All rights reserved.13 - 9 Developing Marketing Strategies (cont’d) 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

10. Copyright © Houghton Mifflin Company. All rights reserved.13 - 10

11. Copyright © Houghton Mifflin Company. All rights reserved.13 - 11 Types of Buying Behavior 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

12. Copyright © Houghton Mifflin Company. All rights reserved.13 - 12 Consumer Buying Decision Process and Possible Influences on the Process Source: William M. Pride and O. C. Ferrell, Marketing: Concepts and Strategies, 12 th ed. Copyright © 2003 by Houghton Mifflin Company, Adapted with permission.

13. Copyright © Houghton Mifflin Company. All rights reserved.13 - 13 The American Consumer Consumer income –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

14. Customer purchases Why do customers buy? What do customers buy? Where do customers buy? When do customers buy? Copyright © Houghton Mifflin Company. All rights reserved.13 - 14

15. Copyright © Houghton Mifflin Company. All rights reserved.13 - 15 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

16. Copyright © Houghton Mifflin Company. All rights reserved.13 - 16 What Do Consumers Buy? What percentage of disposable income is pent on various categories of products and services? Source: “Consumer Expenditures in 2002,” Bureau of Labor Statistics, April 2002.

17. Copyright © Houghton Mifflin Company. All rights reserved.13 - 17 Poverty People that are living at or below the poverty line have no discretionary income. poverty line The poverty line is the minimum level of income deemed necessary to achieve an adequate standard of living incomestandard of living

18. Copyright © Houghton Mifflin Company. All rights reserved.13 - 18 Where Do Consumers Buy? 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

19. Copyright © Houghton Mifflin Company. All rights reserved.13 - 19 When Do Consumers Buy? When buying is most convenient Hours have stretched to include evenings, holidays, and Sundays Many online catalog companies now offer twenty-four hours a day, seven days a week access