1. Foundations of Business 3e
Pride, Hughes, & Kapoor

2. Building Customer Relationships Through Effective Marketing
Chapter 11

3. Learning Objectives
Understand the meaning of marketing and the importance of management of customer relationships.
Explain how marketing adds value by creating several forms of utility.
Trace the development of the marketing concept and understand how it is implemented.
Understand what markets are and how they are classified.
Identify the four elements of the marketing mix and be aware of their importance in developing a marketing strategy.

4. Learning Objectives (cont.)
Explain how the marketing environment affects strategic market planning.
Understand the major components of a marketing plan.
Describe how market measurement and sales forecasting are used.
Distinguish between a marketing information system and marketing research.
Identify the major steps in the consumer buying decision process and the sets of factors that may influence this process.

5. Marketing “
The activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large “

6. Exchange Between Buyer and Seller
Source: William M. Pride and O. C. Ferrell, Marketing: Concepts and Strategies, 15th ed. (Mason, Ohio: South-Western/Cengage Learning, 2010.) Adapted with permission.

7. Major Marketing Functions

8. 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: 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

9. Utility: The Value Added by Marketing
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

10. Types of Utility

11. 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”
To achieve success, a business must:
Communicate with potential customers to assess their needs
Develop a good or service to satisfy those needs
Continue to seek ways to provide customer satisfaction

12. The Marketing Concept (cont.)
Evolution of the marketing concept
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 force
1950s
Business efforts also focused on satisfying customers’ needs

13. Evolution of the Marketing Concept (cont.)
Production Orientation
Sales Orientation
Marketing Orientation
1950
1850
1900
2000
Source: Adapted from William M. Pride and O.C. Ferrell, Foundations of Marketing, 3rd ed., © 2009 by Houghton Mifflin Company. All rights reserved.

14. Evolution of the Marketing Concept

15. The Marketing Concept (cont.)
Implementing the marketing concept
Obtain information about present and potential customers
Their needs, how well those needs are being satisfied, how products might be improved, customer opinions about the firm
Pinpoint specific needs and potential customers toward which to direct marketing activities and resources

16. The Marketing Concept (cont.)
Implementing the marketing concept (cont.)
Mobilize marketing resources to:
Provide a product that will satisfy customers
Price the product at an acceptable and profitable level
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

17. Markets and Their Classification
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 household 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

18. Markets and Their Classification (cont.)
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

19. 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 (place), and promotion developed to satisfy a particular target market)

20. Developing Marketing Strategies (cont.)
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

21. General Approaches for Selecting Target Markets

22. General Approaches for Selecting Target Markets (cont.)

23. General Approaches for Selecting Target Markets (cont.)

24. Common Bases of Market Segmentation

25. Advertisers’ Classification of Audiences
Name
Age
Needs
Influencer
Millennials
<30
Tech Savvy
Media saturated, ethnically diverse
Gen Xers
30-45
Media Savvy
More cynical than millennials
Boomers
45-64
Avid
Consumers
Deny aging process
Matures
65+
Practical, pragmatic
Money conscious
Source: “Audience Research,” MediaKnowAll, Accessed 10/10/11.

26. 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

27. Class Exercise (cont.)
Identify one or several characteristics or variables that could be used to segment the markets for each of these products.
Air passenger service
Cameras
Swimsuits
Restaurants

28. The Marketing Mix and the Marketing Environment (test)

29. 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

30. Components of the Marketing Plan

31. 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
Importance of measuring sales potential
Evaluate feasibility of entering new segments
Decide how best to allocate marketing resources and activities
Estimates should do several things
Identify the relevant time frame covered by the forecast
Define the geographic boundaries of the forecast
Indicate for which products the forecasts are relevant

32. 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

33. The Six Steps of Marketing Research

34. Marketing Information (cont.)
Using technology to gather and analyze marketing information
Databases such as LEXIS-NEXIS, Reader’s Digest
Online information services offer subscribers access to , websites, mailing lists
Useful websites such as Nielsen, Advertising Age

35. Sources of Secondary Information

36. 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

37. Consumer Buying Decision Process and Possible Influences on the Process

38. Types of Buying Behavior (cont.)
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
Of particular interest to marketers due to choice of how to spend it

39. 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.

40. Influences on where to buy
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

41. When Do Consumers Buy? When buying is most convenient
Hours have stretched to include evenings, holidays, and Sundays
Many online catalog companies now offer access twenty-four hours a day, seven days a week

42. Chapter Quiz
The utility created by transferring title of a product to the buyer is called __________ utility.
form
time
production
place
possession

43. Chapter Quiz
J.C. Penney is considered to be a member of which type of market?
Business-to-business
Reseller
Consumer
Producer
Institutional

44. Chapter Quiz
The ingredient of the marketing mix concerned with product design, brand names, packaging, and warranties is
pricing.
quality.
product.
distribution.
promotion.

45. Chapter Quiz
All of the following are true of marketing plans except that they should
not be modified.
include details of task scheduling.
specify task objectives.
describe the firm’s current situation.
focus on a particular product or product group.

46. Chapter Quiz In this chapter, MIS refers to _______ system.
merged information
major information
marketing information
market influential segmentation
minor information